Elon Musk’s $16.8 Billion Chip Bet: 3 Strong Buy Stocks

Elon Musk just committed a whopping 16.8 billion to build a massive new AI chip factory in Texas that has been called Terafab. And while Musk's companies Tesla and SpaceX get the big headlines, some of the best investment opportunities could be hiding in the companies that will actually supply this massive build-out. So, I went digging deep to find those companies in the best position to benefit, and three stocks emerge head and shoulders above the rest. One has earnings projected to explode higher. Another has a top analyst calling for more than 50% share price gains in the coming year. And the last one is the highest-rated stock of the bunch according to our coveted Quant Ratings model. Now, we'll get to them all shortly, so stick around. But first, let me quickly tell you who I am. I'm Steve Wrightmeister, but all my friends call me Wrighty. I've been investing for over 40 years, and I'm a partner at Wall Street Zen, where our Quant Ratings system identifies the stocks with the highest likelihood of outperforming the market. Now, if you like the idea of finding stocks poised to benefit from timely news catalysts like this one, then do me a favor and hit that like button. It tells me to record more videos like this in the future. And before we get to those top three stocks, I need to properly explain what actually happened and why it could equal a massive opportunities for investors in the know. Last Thursday, Tesla and SpaceX announced Terafab, a massive new chip factory in Texas backed by an initial 16.8 billion-dollar commitment. And here's why it could create a huge opportunity for investors. 16.8 billion might just be the beginning of a lot more money to follow. If all the planned phases get built, then the total spending could actually reach 119 billion. We are talking about a 100 million-square-foot complex designed to make, package, and test advanced chips all under one roof. Elon Musk has called it the largest and most valuable building on Earth, right? And there's a reason they're willing to spend that kind of money. Tesla wants millions of Optimus robots and fleets of self-driving cyber cabs, whereas SpaceX is pursuing data centers in orbit. All of it requires a staggering amount of computing power and advanced semiconductor chips. And that's where the investment opportunity starts to come in. A buildout this big creates winners far beyond Tesla and SpaceX. Billions of dollars have to flow through companies supplying the chips and servers and equipment and infrastructure that make terrafab possible, right? Those are the picks and shovels plays I'm interested in. So, I dug into that supply chain and found three stocks positioned right in the path of all that spending. Let's start with our first of three stocks today in Lattice Semiconductor with the symbol of LSCC. Lattice designs a special kind of chip called an FPGA. And in plain English, that's a chip you can reprogram after it's already been built. That flexibility makes their chips the connective tissue inside data centers, factory robots, and edge devices. Exactly the kind of gear a buildout like terrafab needs to function properly. And remember what terrafab is actually for. Tesla robots, Tesla's cybercabs, SpaceX's orbital data centers. Every one of those is packed with exactly the kind of smart, adaptable silicon that Lattice specializes in. Okay. So, as that wave of demand starts flowing, Lattice is sitting right in the heart of that current. And the growth story here is not subtle. Lattice's earnings are forecast to grow at over, get ready for this, 200% a year going forward. This is many, many, many times the pace of any of their semiconductor industry peers. Quick aside before I continue, if you enjoyed discovering stocks aligned with current events like this one, then the best thing you can do for yourself right now is sign up for my next live training session this coming Monday. The focus is on timely market insights plus my top picks. Now, it's totally free, but you do need to sign up. Do that now to join me this coming Monday. Just go to wallstreetzen.com/live. All right. Back to Lattice. Uh, Wall Street is all over this one. The stock is covered by 11 analysts and they firmly land on a consensus strong buy recommendation. And it's not the second stringers here, right? This is a who's who in top-rated analysts, including John Vin of KeyBanc, Blaine Curtis of Jefferies, and Reuben Roy of Stifel Nicolaus. All ranked in the top 1% of the 53+ 100 analysts tracked on wallstreetsand.com. Really elite stock pickers one and all. Now it's time to review the stock under the microscope of the Zen Ratings Quant model. All in all, we analyze 115 different factors for every stock and then boil it down to a single letter grade of A through F. You can further explore a stock's strengths and weaknesses through seven underlying component grades like growth, value, momentum, and more. With all that background in place, it's great to know that Lattice earns a coveted A rating, which amounts to a strong buy recommendation. Note that A-rated stocks have beaten the S&P 500 by nearly 3:1 over the years. So, to understand what makes the fundamental profile so strong, we will now turn to the component grade review. The party starts with safety in the top 15% all stocks. That is very rare for a tech growth stock like this one to have such a strong safety rating. Sentiment, which tracks the smart money activity, is in the top 8% all stocks. Momentum rides right alongside in the top 8%. Then we have financial strength, the top 7%. And the standout grade is growth, top 4% all stocks tracked. This bodes very well for continued growth in the quarters ahead. These factors soften the one blow which comes from the middling C grade for value. But rarely does growth this hot come cheaply. Rather, this is more of a growth at a reasonable price stock. And if that growth really does come in as much as expected, then there's little doubt these shares will continue to outperform. Quick ask before we move on to our next stock. If you're finding Stock Insights to this useful, then go ahead and hit that subscribe button. That's because I publish data-driven stock analysis like this every single week and I'd hate for you to miss out on the next one. All right, our second stock is one you will most certainly know and that is Dell Technologies with the symbol of well, you know the symbol for Dell. If you still think of Dell as a personal computer company, it's time to wake up and smell the coffee. That's because today Dell is one of the biggest arms dealers of the AI build-out. When a hyperscaler or a mass-size project needs racks and racks of AI servers wired together and shipped at scale, Dell is one of the few companies on a planet that can actually deliver on that promise. Terafabs purpose is to make more chips, lots and lots of more chips and Dell builds and sells the servers those chips will likely go into. That's a very good lane to be in at this time. The proof of it being in the right lane showed up big time in their latest earnings report. Not just a beat, but they actually saw a 3x rise in earnings over the previous years. Now, 3x growth doesn't come around often, but but most certainly not expected from a 300 billion market cap company. That's the massive AI server demand showing up for all to see and the timing here is what makes it so interesting. Dell reports earnings again in just a few weeks. So, a fresh catalyst is sitting right around the corner landing right as this Terafab news puts the whole AI infrastructure story back in the spotlight. You should know that the stock is already moved. Shares have nearly doubled over the uh just the past 3 months. So, I know some of you are wondering, "Hey, did I already miss out?" Now, here's why this move may be far from over. Terafab and projects like it are pushing a fresh wave server demands in the pipeline. So, the demand story that drove this run is still building, not fading away. Wall Street most certainly has faith in its continued upward trajectory as well. Dell is covered by 18 analysts and the consensus lands on a strong buy recommendation. The loudest voice in the room is Mandeep Singh Husaini of Susquehanna, a top 1% analyst who recently upgraded uh the stock and slapped on the single highest target on the street calling for more than 50% more upside in the year ahead. Now, let's run it through our quant model to see how it stacks up. Gladly, Dell earns another elite A rating because after the full 115 factor review, it is in the top 3% of all stocks tracked thanks to its sterling fundamentals. Now, the component grades reveal even more to like in these shares. Financial strength comes in the top 18% of all stocks, then it takes a big leap from there. Sentiment score is in the top 3%. There's a lot of Wall Street interest in these shares as you might imagine. Growth, top 2% foreshadows more earnings beats ahead. And the standout grade is momentum, in the top 1% of all stocks tracked. Add it all up and you have a stock firing on all cylinders. The only modest sign of caution is the tepid C grade for safety. That is really more about the volatility inherent in most every tech stock these days, and it's pretty easy to stomach that when you consider the upside. Now, plain and simple, if you believe in the continuation of the AI build-out, and you should, and how TeraFab only improves that picture, and it's pretty easy to appreciate the bull case for Dell shares this time. All right. Now, on to the last stock that I teased about earlier. It scores the highest in our Zen Ring's quant model of any stock we talk about today, and has truly exciting upside potential that I'll share with you in just a moment. Before I do that, just one more thing. If you want to stay one step ahead of the market, then join me live every Monday because that's when I share my updated market outlook and trading plan to outperform. This is also when I unveil my trade of the week, based upon our Zen Ring's quant model and my greater than 40 years of investing experience. It's a free event, but you do need to register. Just go to wallstreetzen.com/live or click the link down in the description, or scan the QR code on your screen. Just pause the video for a minute to sign up. I'll be patient and wait for you. Then I look forward to seeing you there on Monday. All right. Here's something you'll almost never see. The single highest rated stock in the entire video today is also the one Wall Street is basically ignoring, covered by only one analyst. Its name is Kulicke & Soffa with a symbol KLIC. All right. Kulicke is about as pure play on chip growth as you will find on the planet. They don't make the chips, rather they make the essential equipment used to assemble semiconductors. So when the world commits to building the world's largest chip factory on Earth, this is the kind of company that will likely sell them the equipment necessary to manufacture those chips. Just like many stocks in the chip space, it ran up significantly over the past year, but over the last month it has actually pulled back roughly 20% creating a stellar buy the dip opportunity. So you've got a company in a powerful long-term uptrend that just went on sale right as one of the biggest chip building commitments in history hits the tape. Just four quarters ago, they probably churned out 28 cents per share in earnings. That has now more than quadrupled to $1.20 per share thanks to explosive chip demand as part of the AI revolution. Right now that demand shows no signs of slowing. Now here's what's odd. The stock is covered by only one analyst making it a truly hidden gem proposition. At some point other Wall Street firms will wake up to the amazing growth story and initiate buy recommendations. That is to great benefit to early movers into these shares because each one of those new buy recommendations will act as a strong catalyst to boost shares even higher. So Wall Street may be asleep at the wheel, but our quant model is wide awake to the special fundamental story unfolding here. Kulicke is not just A rated, but actually in the top 1% of all stocks analyzed by our model. So maybe calling it an A+ rating is more accurate. And yes, the fundamental strength is fully reflected in its all-star component grades. Value comes in the top 70% no doubt benefiting from the recent sell-off. Financial strength is in the top 14% all stocks. Momentum is a notch higher in the top 10%. Sentiment is top 9% showing some smart money interest in these shares and the standout grade, as it should be, is growth in the top 2%, which bodes well for more earnings growth ahead. And here's the cherry on top. Kulicke is the single highest rated stock in the entire semiconductor equipment space, topping a list of over 30 highly rated names. The one soft spot is exactly what you expect, and that is the middle-of-the-pack safety grade, pointing to the volatility that comes naturally with most semiconductor-related stocks. Kulicke is as perfectly positioned as a company could be for the further ramp-up in chip production. Plus, it's in the top 1% of all stocks analyzed by our coveted Zen Ratings Quant Model. And the final piece of the puzzle is that 20% pullback in shares, making now a great entry point. Now, what a fantastic place to close out the list of stocks most likely to benefit from the massive tariff fab build-out. All right, all three of the stocks today are A-rated from our Quant uh Model. But remember, those grades are updated daily. So, if any of these stocks caught your eye, then you'll want to finalize your research sooner rather than later. Gladly, you can do that for over 4,600 stocks just by typing in their ticker at wallstreetszen.com. So, be sure to bookmark our site for all your future stock research needs. Now, I want to hear from you. Which of these three stocks is your favorite, and why? Drop in the comments section below to spark some conversation with our community. And if you want to see something equally as exciting, then check out our recent video about three stocks that are going to benefit the most from the Pentagon's hypersonic build-up. It's coming up on your screen right now.