3 Genius AI Stock Picks for Investors Who Missed the First Wave
0h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
artificial-intelligencestock-picks
Fazen Markets Editorial Desk
Collective editorial team · methodology
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The first phase of the artificial intelligence investment boom added an estimated $10 trillion to global equity market capitalization from 2022 through early 2026. Finance.yahoo.com reported on 24 May 2026 that investors who missed this historic rally still have specific opportunities in underappreciated value-chain stocks. The next phase of AI diffusion is projected to add another $5 trillion in value, focusing on foundational hardware providers and productivity-enabling software platforms.
The first wave of AI gains, driven by hyperscalers like Nvidia and Microsoft, concluded with the NASDAQ-100 index reaching a record high of 20,432 in April 2026. This surge mirrored the dot-com boom's infrastructure phase of 1998-1999, where companies like Cisco Systems rose over 1,000% before the broader application boom.
The current macro backdrop features stabilizing interest rates, with the 10-year Treasury yield holding at 4.2%, providing a clearer valuation framework for growth stocks.
A key catalyst for the next wave is the shift from training massive models to deploying them at scale across enterprises and consumer devices. This requires massive new investment in inference-optimized hardware and specialized software tools, moving value down the supply chain.
This transition mirrors the shift from internet backbone builders in the late 1990s to e-commerce and software-as-a-service leaders in the early 2000s, which created sustained multi-decade winners.
First-wave AI leader Nvidia achieved a trailing price-to-earnings ratio of 45, reflecting premium pricing for its dominant position in AI training chips. The Philadelphia Semiconductor Index (SOX) trades at a forward P/E of 28, a 15% premium to its 10-year average.
In contrast, several critical enablers in the AI ecosystem trade at significant discounts. The following table illustrates the valuation gap between first-wave winners and second-wave enablers as of late May 2026.
| Company / Metric | Forward P/E Ratio | YTD Revenue Growth (%) | AI Segment as % of Sales |
|---|---|---|---|
| First-Wave Leader (Avg) | 42 | 55% | 75% |
| ASML Holding | 31 | 18% | ~100% |
| Synopsys | 34 | 15% | 35% |
| ServiceNow | 48 | 22% | 25% |
ASML's forward P/E of 31 represents a 26% discount to Nvidia's multiple, despite its monopoly in extreme ultraviolet lithography machines essential for manufacturing next-generation AI chips. The iShares Semiconductor ETF (SOXX) has gained 12% year-to-date, underperforming the 18% rise in the SPDR S&P 500 ETF (SPY).
The capital shift from AI model creators to infrastructure providers will benefit semiconductor capital equipment and electronic design automation stocks most directly. ASML Holding is positioned to gain from an order backlog exceeding 35 billion euros, driven by logic chipmakers expanding capacity for AI processors.
Synopsys stands to capture growth as chip design complexity increases, with its AI-powered EDA tools enabling a 30% reduction in time-to-market for new AI accelerators. The enterprise software sector, particularly workflow automation platforms like ServiceNow, will see revenue acceleration as AI features are embedded into core products, potentially boosting annual contract value growth by 500 basis points.
A primary risk is customer concentration; a slowdown in orders from the top three foundry customers could impact 60% of ASML's revenue. Institutional flow data shows net buying in semiconductor equipment ETFs over the last six weeks, totaling $4.2 billion, indicating professional positioning for the next phase.
Quantitative funds are increasing exposure to mid-cap tech stocks with high R&D intensity as a proxy for AI innovation beyond the mega-caps.
The immediate catalyst is TSMC's quarterly earnings report on 17 July 2026, which will provide forward guidance on capital expenditure for advanced AI chip packaging technologies like CoWoS.
The next key date is the annual Synopsys User Group conference on 15 September, where adoption metrics for its AI-driven chip design tools will be disclosed.
Investors should monitor ASML's quarterly bookings, with a sustained level above 5 billion euros per quarter signaling continued strong demand. A break above the $1,050 resistance level for ASML's stock would confirm the bullish thesis for capital equipment.
For software, watch ServiceNow's Q3 earnings on 23 October for updates on generative AI feature adoption rates within its Now Platform. A decline in the 10-year Treasury yield below 4.0% could provide a further valuation tailwind for all growth-oriented AI stocks.
Semiconductor capital equipment leader ASML trades at a forward P/E of 31, a discount to the broader semiconductor index. Its monopoly in EUV lithography is indispensable for producing the advanced chips required for AI, yet its stock has lagged the performance of chip designers. Electronic design automation firm Synopsys also trades below the valuation multiples of pure-play AI software companies, despite its tools being critical for designing next-generation AI hardware.
The first wave from 2022-2025 was characterized by explosive revenue growth for companies providing the computing power to train large language models, like Nvidia. The current phase focuses on the diffusion and efficient deployment of AI. This benefits companies that enable the mass production of AI chips (like ASML), those that design them more efficiently (like Synopsys), and platforms that integrate AI to improve business workflows (like ServiceNow), representing a broader and more sustainable value chain.
The primary risk is cyclicality in semiconductor capital spending. Foundry customers like TSMC and Samsung operate massive, multi-year expansion cycles. A macroeconomic downturn leading to a pause or reduction in these capex plans would directly impact equipment order books. For AI software enablers, the risk is integration fatigue and slower-than-expected enterprise adoption, which could delay revenue recognition from new AI features and hurt growth projections.
Investors can target foundational hardware and software enablers trading at rational valuations to capture the next $5 trillion in AI value creation.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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