Dips Never Last. I'm Buying These 5 Stocks Now.

A huge shock just hit the market and Wall Street isn't ready for it. The media isn't covering it and it's much bigger than most investors realize because it'll hit every stock from three angles at once. The cracks are already showing, but no one is paying attention. My name is Alex and I've been investing in AI stocks for over 10 years now, and I've seen enough of these drawdowns to know what real buying opportunities look like. Let me walk you through what's happening and how I'm investing in it. Your time is valuable. So, let's get right into it. The entire AI trade is built on one assumption. The amount of compute power that the AI industry can build is only limited by money. Every stock's market cap, every capex budget, and every earnings call follows the same pattern. Build it and they will come. But over the last couple weeks, those assumptions have started to crack. And AI stocks did too. TSMC is the company that actually makes the world's most advanced chips. So, every AI company depends on them to do their job. They reported earnings on July 16th, and they had a blowout quarter. Revenues came in at over $40 billion, which was up 34% year-over-year, while their earnings per share jumped 77% from last year. Both numbers beat analyst expectations, and management even raised their guidance for the rest of the year. Results like these are exactly why Wall Street isn't ready for what's about to happen and why the media is missing it altogether. Chip on wafer on substrate or co-as is an advanced packaging technique where TSMC mounts a finished chip and its memory onto a single base. That way everything sits extremely close together to transfer data as fast as possible. This is the step that turns parts into working processors. On that same earnings call, TSMC's CEO said that their co-as nodes are running at max capacity already and they're sold out into 2027. For investors, that means two important things. First, all the money in the world won't produce more chips, at least in the near term. Some of TSMC's customers are already waiting for more than a year for their chips to clear this co-ass packaging step, which creates a fundamental limit on how fast other AI companies can deploy their own hardware infrastructures. And second, increasing production capacity won't solve this problem in the near term either since securing land and power, building chip factories, and filling them with specialized machines is a multi-year process. And speaking of specialized machines, ASML also reported earnings last week. ASML is the only company on Earth that can build EUV lithography machines. These machines are the size of a small apartment and contain over a 100,000 parts that come together to print microscopic circuits onto chips using extreme ultraviolet light or EUV light for short. And since ASML is the only company that makes them, AI chip production can only grow as fast as the number of these machines. On their latest earnings call, ASML said that they'll build around 65 EUV machines this year and around 85 next year. That sounds like a big jump, but remember what I just said. This machine ships in hundreds of crates and takes months just to assemble. After that, it still has to be calibrated, tested, and tuned for the specific chip it's going to be making. By the way, lithography machines can only run in clean rooms, special sealed, and filtered facilities with essentially zero dust in the air because a single speck of dust landing on the wafer can interfere with the light and ruin the entire chip. Oh, yeah. And on top of that, extreme ultraviolet light gets absorbed by air. So EUV lithography machines have to operate in a vacuum where absolutely nothing can interfere with the beam. No particles, no stray molecules and no vibration. It can take up to 2 years to go from delivery to producing chips with these machines at full volume. So current advanced chipm at capacity and new machines can take years to come online. And then there's the racks that the chips go into. Earlier this month, semi analysis reported that Nvidia's Kyber rack has been delayed by more than a year. Kyber is Nvidia's next generation server rack that holds compute trays vertically, kind of like books on a shelf in order to pack a whopping 576 GPUs into a single rack running at around 600 kW. What makes the Kyber system so special is that it does away with all the high-speed network cables connecting every GPU together and instead it uses a printed circuit board backplane. If you've watched this channel for a while, you've seen me cover this back plane a few times already because it's one of the biggest innovations of the entire AI era. But if you haven't, that back plane is a circuit board with 78 separate layers laminated together. 72 of those layers connect each compute tray to the rest of the rack. Eight chips per tray times 72 trays per rack is how Nvidia gets 576 chips to work together like their one massive GPU. Compared to Blackwell, that means data centers can pack eight times the GPUs in a single rack while drawing about five times the power, giving them a lot more use out of the same physical space when they move to Reuben Ultra and power the next generation of AI tools. By the way, more and more people are using Claude to build apps, design presentations, automate their job, and make more money on the side, all without writing any code. That means AI isn't optional. It's an advantage that you either have or others have over you. That's where Outskll comes in, the sponsor of this video. 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All right, so Nvidia's next generation Kyber systems are how they plan to pack 576 GPUs into a single rack. That density is the whole point of the system. But it's also a big problem. Cramming so many chips so close together is exactly what's straining that circuit board that they all plug into, which is the cause of this reported delay. Importantly, Nvidia denied the delay, but they used pretty vague language. All they said was that their road map remains intact without any other details. Currently, Nvidia's Vera Rubin systems are in full production. But this delay would push their Ruben Ultra systems back to 2028. And even if their road map is intact, the first Kyber could ship on time, but take longer to roll out at scale. So, under the current wave of strong earnings calls, there's an undercurrent of three major bottlenecks to AI growth all hitting the market at once. ASML can only ship dozens of chipmaking machines per year. TSMC's AI chip packaging is already running at its limit into 2027, and the next generation Nvidia racks those chips go into might be delayed altogether. Then add in the Straight of Hormuz, which has been closed to shipping since the Iran war began earlier this year. And it was tightened again this past month when President Trump reinstated the naval blockade of Iran's ports. Like I covered in previous videos, Taiwan imports over 90% of its energy. It keeps less than a month of gas in reserves and a third of the world's helium ships through that same passage, all of which TSMC needs to keep making chips at full volume. So that's the setup in the market right now. AI stocks are priced for compute to keep scaling as fast as companies can spend their money, but the machines building and running the AI chips have a hard ceiling. This is what I think the market is finally starting to price in as of last week, which could be a great buying opportunity for long-term investors that are patient enough to wait for the payoff. So, here are the five stocks I'm buying when the rest of the market panics. Let's start with ASML itself since their stock is down by 10% over the last month. It's worth repeating that ASML is the only company on Earth that makes EUV lithography machines. When there's unlimited demand for something only you can supply, it doesn't just mean that you can raise your prices. It means your customers can't rush you, they can't replace you, and they can't negotiate you down. ASML is expanding their production capacity by about 30% per year, and demand is still growing faster than that. So, as long as chipmakers need more machines than ASML can make, ASML gets to set the price. When your customers don't have a choice, you don't have a problem. ASML's biggest and most important customer is TSMC, the Taiwan semiconductor manufacturing company, ticker symbol TSM. They run ASML's machines and their co-as chip packaging processes are fully booked into 2027. But this dependency cuts both ways. ASML's machines don't matter until TSMC packages and ships the finished chips, and TSMC can't expand their own production capacity without ASML's machines in the first place. So again, when there's way more demand than supply, TSMC's margins and earnings get to skyrocket. 67% gross margins and 77% earnings growth. Exactly the kind of numbers you'd expect to see from a company that gets to set its own prices. But the risks are just as real. The longer the Straight of Hormuse stays effectively closed, the more exposed TSMC becomes to supply chain shocks that could slow down their chip production even further. On top of that, the jump to their next generation two nanometer chip production is expensive and risky. It's the first time they've changed the fundamental shape of their transistors in over a decade and only the second time in the company's almost 40-year history. Long story short, TSMC is replacing their finfet transistors with a new structure called gate allaround or GAA for short. These new chips built on the 2nanmter node run about 15% faster at the same power or they can draw about 30% less power at the same speeds versus the 3nanome chips that are shipping today. Saving power is the name of the game when it comes to AI since data centers are fundamentally limited by the power they have access to. So using 30% less power is a pretty big deal. The reason this is a risk and not just a win is because brand new chip manufacturing nodes take a long time to ramp up. Yields start low and every wafer that breaks is a cost that TSMC has to eat themselves. And 2 nanome wafers cost around 50% more than the current 3nanometer ones. So until these 2n fabs can fully ramp up over the next few quarters, they actually drag TSMC's margins down. That short-term pain for long-term gains is why I said this is a great buying opportunity for long-term investors that are patient enough to wait for the payoff. TSMC stock is currently down by almost 15% over the last month. But there's more to chipmaking than just ASML and TSMC, which is where the next stocks on my list come in. And if you feel I've earned it, consider hitting the like button and subscribing to the channel. That really helps and it lets me know to make more content like this. Thanks. Now, let's talk about another important part of the chipm process, deposition and etching. The next stock on my list is Lamb Research, ticker symbol LRCX, and their core business is selling machines for etching, deposition, and wafer cleaning. Deposition is the step where ultra thin films of material like metals, insulators, and silicon compounds are laid across the wafer, one layer at a time. Think of deposition kind of like spray painting the wafer in perfect uniform layers, except instead of paint, it's the actual wiring and insulation the chip is built from. A finished chip is made up of hundreds of these layers stacked on top of each other, one layer at a time. The etching process is the opposite. After a layer is placed during deposition, etching selectively removes material to cut the circuit pattern into the wafer trenches, holes, and channels where electrical connections need to run. So deposition adds a layer and etching carves away everything that isn't part of the design down to features that can be smaller than a virus. Chipm is essentially these two steps repeated in many cycles layer by layer until the full 3D circuit is done. When chipm companies like TSMC, Intel, Micron, Samsung, and SKHix expand their fabs, they're expanding them with machines made by Lamb Research. And the risks work the same way. If these companies start expanding slower, Lamb will feel it first. LRCX stock is down by 25% over the last month. And buying it is basically a bet that demand and production for AI chips will keep accelerating. And right next to Lamb Research is KLA Corp. ticker symbol KLAC. And their stock is also down by more than 20% over the last month. KLA builds the inspection and measurement machines to quality control the chips coming out of a fab. Their systems can scan each wafer for defects that are invisible to the naked eye. They can flag particles and pattern flaws that are just nanometers across. And they can measure whether every layer landed at the right thickness and lined up with the layer beneath it. In practice, these machines use optical and electron beam inspection tools to hunt for flaws, metrology systems to measure the microscopic dimensions of each layer, and highly specialized software to tie it all together by telling the fab what's wrong in the process and where to fix it. Ka has over a 50% share of the overall semiconductor process control and inspection market and over an 80% market share when it comes to optical wafer inspection. Specifically, its next biggest competitor is Applied Materials, ticker symbol AMAT, which holds just 10% of the market. KLA expects their advanced packaging inspection business to hit about a billion dollars this year, which would be an increase of more than 50% year-over-year. When a FAB is packing billions of transistors onto a single chip, catching one bad step early can be the difference between a profitable wafer and a multi-million dollar brick. Which is why every chipm company that's expanding their fabs needs KLA's machines. And once those machines are part of the process, ripping them out becomes expensive and risky. So chipmakers keep buying them to make the most out of KLA's ecosystem, which further increases their market share in the process. And the fifth stock on my list is Verdive, ticker symbol VRT, for one obvious reason. Once the chips exist, they need power and cooling, which is Verdives's entire business. Liquid cooling is now the default for new AI data centers. Remember, Nvidia's Kyber rack will hold 576 GPUs and use 600 kW of power. It'll also change how electricity even makes it to the rack in the first place. Since 600 kW is too much for current power delivery systems, Verdivive is one of Nvidia's partners building that new power architecture and their 800vt DC power portfolio is set to roll out right ahead of Nvidia's Kyber Racks and their Reuben Ultra chips. I put Verdive last on this list for two key reasons. First, if Nvidia's Kyber really is delayed, Verdivive will feel it too. That's one reason the stock could be down by almost 20% over the last month. And second, they're about to report earnings at the end of this month. So, I'm waiting for their latest numbers before buying this dip. A big market shock is here, and Wall Street isn't ready for it because it's hitting every stock from three angles at once. ASML's machine deliveries, TSMC's chip packaging capacity, and potential delays to Nvidia's next generation data center racks. The media doesn't see it coming, but now you do. Let me know which stocks you're buying and what your plan is if this market draw down continues. And if you want to see what other stocks I'm buying, check out this video next. Either way, thanks for watching and until next time, this is Tickerol U. My name is Alex reminding you that the best investment you can make is in you.