💰New Alpha | Pick AI Stocks for Extra Returns:SMTC/CRDO/INOD
💰 In May, major US stock indices performed remarkably well, making this an opportune moment for trading amidst intense competition.
💹 $Semtech(SMTC)$/$Credo Technology Group Holding Ltd(CRDO)$/$Innodata(INOD)$: Segment markets are uncovering new opportunities, amid recent AI trend.
📣 Stay tuned, supercharge purchasing power through CashBoost!
| Timing is king
Chip stocks rallied collectively, driven by favorable news from US-China trade negotiations. $Philadelphia Semiconductor Index(SOX)$ and $NVIDIA(NVDA)$ indices recovered, with $Semtech(SMTC)$ rising by 9%, contributing to the Nasdaq’s gains.
At the same moment, Institutional investors accelerated their bullish positions, quickly correcting their previous bets. On June 6, top institutional investors reaffirmed their confidence in the US economy at Forbes' annual investor conference. Leaders from BlackRock, Citadel, JP Morgan, SoftBank, and Singapore's sovereign wealth fund GIC underscored the potential of the US market: “It’s still frustrating to see that we’re leaving so much opportunity on the table.”
Staying at the center of the trading table, one must take the initiative in information gathering. With a deluge of information and short-term price deviations from fundamentals, driven either by excessive reactions to news or by the FOMO sentiment of capital, maintaining a light position to test the waters, while being steadfast in direction and bold in bets, is essential for success.
| Market recap
Reflecting on the recently concluded May, major US stock indices performed excellently, with $S&P 500(.SPX)$ rising by 6.3% and $NASDAQ(.IXIC)$ increasing by 9.7%, rendering the "sell in May" adage ineffective.
On Monday, the first meeting of the US-China economic and trade consultation mechanism was held in London, with negotiation news boosting US chip stocks and popular Chinese concept stocks. During the session, $Philadelphia Semiconductor Index(SOX)$ briefly surged nearly 3%, and $NVIDIA(NVDA)$ rose over 2.2%, lifting the Nasdaq index.
On that Monday, $NASDAQ Golden Dragon China Index(HXC)$ closed up by 2.07%, $Bilibili Inc.(BILI)$ increased by 3.8%, and $WeRide Inc.(WRD)$ rose by over 3%.
Megacaps
Investors continue to bet on Musk. Current market valuations for $Tesla Motors(TSLA)$ show significant divergence, with the ongoing verbal skirmish between Musk and Trump stirring market nerves. Wall Street giant Morgan Stanley has voiced support for Tesla, reaffirming its long-term bullish outlook and maintaining an $800 price target.
See also: $Meta Platforms, Inc.(META)$ plans to invest over $10 billion in AI data labeling company Scale AI. This substantial investment is seen as highly significant, potentially accelerating the integration and monetization of META's own AI application.
WWDC 2025
Investor expectations for $Apple(AAPL)$ are relatively low, making it a good opportunity to enter when negative information is fully priced in. At the recent conference, AAPL announced the software system update for its entire product line, iOS 26, which introduces a new Liquid Glass visual design. Perhaps WWDC is no longer groundbreaking; with sufficiently low expectations for AI and ample "spoilers" for the newly released UI, the market responded with AAPL's stock price falling only 1.2% on the night, followed by a rebound in after-hours trading. Looking ahead, a more pragmatic AAPL, if focused on product development and diligently catching up, can instill greater confidence in investors based on its established fundamentals.
Top movers
The drone eVTOL concept stocks surged after Trump signed three executive orders to accelerate industry development. $Unusual Machines Inc(UMAC)$ skyrocketed by 23.7%, $Vertical Aerospace(EVTL)$ rose by 15%, and $Joby Aviation, Inc.(JOBY)$ recorded a 13.7% increase.
$CoreWeave, Inc.(CRWV)$ increased by 15.7%, while $Circle Internet Corp.(CRCL)$ rose by 7%. The FOMO sentiment continues, fueling ongoing gains for new stocks. In the coming week, two highly watched companies, fintech company Chime Financial and aerospace defense firm Voyager Technologies, are set to face market scrutiny.
| AI stars: Feeling good
AI remains the main investment theme in the US stock market, and leading companies in niche sectors should be closely monitored to capture opportunities for excess returns.
SMTC
Semiconductor company $Semtech(SMTC)$ focuses on data centers and AI chip sectors, with demand for its high-performance analog chips increasing by 78%, benefiting from AI computing power and cloud computing expansion. The company reported a revenue of $251 million in Q1 of FY2026, representing a year-on-year growth of 22%. Sales from its data center business reached $51.6 million, a staggering 143% increase year-on-year.
CRDO
AI infrastructure provider $Credo Technology Group Holding Ltd(CRDO)$ specializes in delivering secure, high-speed connectivity solutions, encompassing SerDes and DSP technologies suitable for various Ethernet application scenarios. The company optimizes AI model operational efficiency through high-speed data transmission technology, with clients including Microsoft and Amazon, and a projected annual revenue growth rate of 49.68%. The explosion of AI and cloud computing has driven demand for high-performance data centers, particularly in high-bandwidth, low-latency data transmission technologies. Credo Technology's solutions have been widely adopted to optimize data interactions between GPU clusters, establishing itself as a critical supplier in the industry infrastructure.
INOD
AI data services company $Innodata Inc(INOD)$ secures partnerships with tech giants through customized solutions, forecasting a 136% year-on-year revenue growth in 2024, indicating significant market value potential. Data labeling is a crucial part of the AI ecosystem, especially following the emergence of large models, which has rapidly expanded the data labeling industry. However, as large models continue to iterate, this labor-intensive sector faces ongoing market re-evaluation. For the full year of 2024, Innodata expects a remarkable 96.44% year-on-year revenue increase, with five of its eight major clients coming from Mag7.
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