4 Compelling Singapore Stocks That Could Ride the AI Wave to Greater Prosperity

Royston Yang
·5-min read
AEM
AEM

The generative artificial intelligence (AI) wave has taken the world by storm since ChatGPT was released back in November 2022.

Nvidia (NASDAQ: NVDA), the market leader in the graphics processing unit (GPU) sector, reported a record quarterly revenue of US$35.1 billion for the third quarter of fiscal 2025.

CEO Jensen Huang remarked that “the age of AI is in full steam”, with AI set to revolutionise workflows and increase efficiency.

With the surge in demand for AI, investors may be wondering which Singapore stocks are poised to hop on the bandwagon.

Here are four Singapore stocks that are well-positioned to ride the AI wave.

AEM Holdings (SGX: AWX)

AEM Holdings provides comprehensive semiconductor and electronic test solutions and has a global presence across Asia, Europe, and the US.

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The group reported a downbeat set of earnings as its core business was negatively impacted by the semiconductor’s cyclical downturn that started in late 2022.

Revenue for the third quarter of 2024 (3Q 2024) fell by 6.5% quarter on quarter to S$74.2 million.

Profit before tax excluding exceptional items stood at S$918,000, a slight 3.5% quarter on quarter improvement from 2Q 2024.

To enhance its ability to deliver better growth, AEM is investing in differentiated test capabilities for AI and high-performance computing (HPC) applications including thermal management, application-specific test instruments, and high-throughput automation.

The group’s capabilities allow it to address the US$8.4 billion test market which is growing at a decent rate of 7% per annum.

With AI becoming more prominent, semiconductor complexity looks set to increase, thereby driving up testing requirements that utilise AEM’s expertise.

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The AI semiconductor market is set to grow at 22% per annum from US$53.4 billion to US$119.4 billion from 2023 to 2027, according to Deutsche Bank.

This growth offers compelling opportunities for AEM to grow its market share and capture more business in the coming quarters.

UMS Integration Ltd (SGX: 558)

UMS Integration provides equipment manufacturing and engineering services to original equipment manufacturers of semiconductors and related products.

In line with the semiconductor downturn, UMS Integration also reported a downbeat set of earnings.

For the first nine months of 2024 (9M 2024), revenue fell 23% year on year to S$174.9 million.

Net profit tumbled 33% year on year to S$29.5 million.

However, the business still generated a positive free cash flow of S$7.4 million for 9M 2024.

UMS Integration also declared an interim dividend of S$0.01 for the quarter, bringing its total dividend payment for 9M 2024 to S$0.032.

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According to SEMI, global spending on 300mm fabrication equipment will reach a record US$400 billion from 2025 to 2027, driven by the increasing demand for AI chips used in data centres and edge devices.

UMS Integration is working closely with its key customers to benefit from the surging demand for wafer fabrication equipment to produce high-value AI chips.

In particular, the group’s key customer has requested for it to ramp up production in the coming months.

Micro-Mechanics (Holdings) Ltd (SGX: 5DD)

Micro-Mechanics (Holdings), or MMH, is a supplier of high precision tools and parts for process-critical applications in the wafer fabrication and assembly processes of the semiconductor industry.

The group reported an admirable set of earnings for its first quarter of fiscal 2025 (1Q FY2025) ending 30 September 2024.

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Revenue inched up 2.5% year on year to S$16.2 million while gross profit improved by 6.5% year on year to S$8.2 million.

Net profit stood at S$3.1 million, up 14% year on year.

MMH saw a rebound in orders at its US subsidiary, MMUS, amid continued cost optimisation.

The group believes that the global semiconductor industry is in the advanced stages of rebalancing production and inventory.

The World Semiconductor Trade Statistics (WSTS) expects the global sales of semiconductors to recover past their 2022 this year with sales of US$611 billion.

WSTS also expects global sales to grow by 12.5% year on year in 2025 to reach US$687 billion.

MMH is cautiously optimistic that its business will continue to improve with this higher projected global sales amount, though the timing may experience a lag as demand for its tools and parts may not correlate perfectly with the semiconductor sales cycle.

Venture Corporation (SGX: V03)

Venture Corporation is a provider of technology products, services, and solutions.

The blue-chip company serves customers in various technology domains such as life science, genomics, healthcare, luxury lifestyle, networking and communications, and advanced industrial.

The group’s revenue saw a sequential, quarter-on-quarter decline in 3Q 2024 to S$689.7 million, mainly due to weakness in the life science and lifestyle consumer segments.

Net profit fell in tandem, dipping by 4.7% quarter-on-quarter to S$60.6 million.

Despite the weaker result, Venture is growing its participation in the AI data centre technology domain along with the market leaders within the sector.

The group is delivering newly-designed network interface cards with better connection speeds, while also securing new wins in the Life Science and MedTech domains.

Venture sees good opportunities on the horizon with new design wins and new product introductions in the AI data centre related business.

In the forthcoming quarters, the group will be onboarding new customers in various technology domains.

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Disclosure: Royston Yang owns shares of Micro-Mechanics (Holdings).

The post 4 Compelling Singapore Stocks That Could Ride the AI Wave to Greater Prosperity appeared first on The Smart Investor.

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