The notion of nanotechnology is not original. Nevertheless, its applicability in several fields is expanding at an exponential rate. For this reason, nanotech stocks have become the newest investing fad to sweep the markets.
The stock market is eager to identify the next technological boom. Therefore, it is not unexpected that nanotechnology stocks have gained momentum in recent months. Since it functions at the atomic and molecular levels, the nanoscale enables the development of new technologies and goods. However, there is also some danger associated. Nanotechnology offers advantages, although it is still a relatively young field. In addition, others argue that we do not completely comprehend the physical and chemical interactions that nanotechnology enables.
Regardless, the following nanotechnology stocks are advancing and concentrating on this sector. Nanotechnology is now being employed in computers, microchips, chemicals, and other technologies. Any advancements that arise will have a huge impact on Nanotechnology. However, there is an opportunity for expansion.
What is nanotechnology?
In Avengers: Endgame, nanotechnology is the technology that powers Iron Man's suit. In actuality, nanotechnology is defined as the use of nanoscale science, engineering, and technology. What, then, is the nanoscale?
The nanoscale is a length scale ranging from 1 to 100 nanometers, and one nanometer is equal to one billionth of a meter. Here are three examples of the size of a nanometer for your reference:
A human DNA strand is around 2.5 nanometers in diameter.
Human hair is around 100,000 nanometers wide.
Nails develop approximately 1 nanometer every second.
We're talking extremely, very little. In fact, a nanometer is so small that a conventional microscope cannot detect it, and a specialized electron microscope is required. Atoms and molecules, the smallest entities on Earth, are measured in nanometers.
What purposes does nanotechnology serve?
There are innumerable possible applications for nanotechnology, and we will discuss a handful before discussing the best nanotechnology stocks to buy. In addition to Iron Man's armor, common study areas include nanocomputers, nanorobotics, and nanobiology (medicine). Nanotechnology offers numerous potential medical applications. For instance, it could be used to more precisely treat chronic diseases, and it could potentially increase the effectiveness of medicine delivery systems.
In addition to the medical field, nanotechnology also possesses considerable potential in the semiconductor business. This is particularly pertinent today due to the worldwide chip scarcity. The chip shortage began owing to problems in the COVID-19 supply chain. Due to supply and demand imbalances, the conflict persists today. Essentially, chip demand is increasing while chip manufacturing has remained constant.
The process of creating current computer chips is not simple, and it entails rare materials, several steps, and extremely complex procedures. This makes it impossible for businesses to simply increase production, and to accomplish this, they must construct brand-new factories.
Nanotechnology and chip scarcity resolution could go hand in hand. The development of microchips could be facilitated by nanotechnology. To create smaller chips, for instance, would necessitate the use of fewer materials, and this saves money and raw materials while increasing the chip's performance. Increasing the efficiency of chips is one method for easing the shortage.
Remember that this scenario is still occurring. However, the possibility exists. In the future, the companies attempting to fix this issue could be valued at billions of dollars.
According to Emergen Research, the global nanotechnology market will reach $290.93 billion by 2028. This represents a strong CAGR of 18.3%.
Market overview and outlook of nanotechnology
In 2006, Lux Research predicted that income from nanotechnology-based products would reach $2.6 trillion by 2014 (a phenomenal rise from nanotechnology's 2004 sales of $14 billion).
A rush of nano-investing activity, including the formation of the PowerShares Lux Nanotech Portfolio, an $89 million exchange-traded fund launched by Lux Research and PowerShares Capital Management, was sparked by such optimistic market forecasts.
The PowerShares Lux Nanotech Portfolio ultimately failed to live up to its early promise. Despite expectations at the top of the mid-2000s nanotechnology investing bubble, nanotech stocks did not achieve the growth pace that investors had hoped for; the fund was liquidated in February 2014 after largely suffering losses since its start.
However, this is not all terrible news. Out of a boom-and-bust market has evolved an industry centered on strategic long-term business plans and creative products with high demand. Numerous businesses generate consistent income from nanotech products, which they reinvest in the market to stimulate innovation.
The nanotech giant 3M (NYSE: MMM), for instance, uses nanotechnology in goods destined for the dental, electronics, architectural, and energy markets. Nanotechnology has numerous applications, including dental restoratives (such as fillings, crowns, and orthopedic braces) and brightness-enhancing optical coatings (which make LCD screens bright and clear). Filtek is one of 3M's primary nanotech products.
With a projected compound annual growth rate of around 16.9 percent between 2020 and 2025, the nanotech market remains an attractive investment opportunity. Despite the fact that the expected growth rates of the mid-2000s are no more, the market continues to develop innovative, far-reaching, and potentially transformative items.
Nanotechnology, the manipulation of matter at the atomic level, is still in its infancy as a science.
However, scientists believe that the discipline has the potential to change numerous industrial sectors, including life sciences, energy, and manufacturing. Dow Chemical Company, another global leader in materials engineering solutions, collaborates with Fruit of the Loom to produce clothes that utilize nanotech to inhibit bacterial growth.
Consequently, a growing number of investors view nanotechnology stocks as a potentially lucrative investment opportunity. For example, in the biological sciences, nanotechnology-based products are currently utilized to diagnose and cure diseases. The energy business is also used to develop more efficient renewable energy and batteries.
Using nanotech, the manufacturing industry creates lighter, stronger, and more durable materials. According to Allied Market Research, the nanotechnology market is predicted to increase from $1.76 billion in 2020 to a whopping $33 billion by 2030. However, projections are not guarantees, so do not rely only on them.
Nonetheless, investors who invest today may see big returns in the future. The entrance barriers are minimal, and more businesses are entering the nanotechnology industry, resulting in increased competition and even quicker innovation.
There is a substantial investment in nanotechnology research and development; for instance, the National Nanotechnology Initiative of the United States received close to $2 billion (NNI). As with any high-risk investment, nanotech stocks have the potential for substantial returns if properly researched and evaluated.
1. Applied Materials (AMAT)
Applied Materials produces tailored materials for chips and displays for the worldwide semiconductor and display industries.
It is the largest manufacturer of semiconductor fabrication equipment in the world. It is strongly involved in the microchip business, which is driven by reducing sizes and applying films atom by atom.
The company provides materials engineering solutions for the production of nearly all chips in the world. Due to its market-leading position, the company did exceptionally well last year. The bottom line and top line both increased by 52.9% and 28.5%, respectively.
The corporation has also been rewarded handsomely by the markets. AMAT has outperformed the S&P 500 by 82.7 percent and its industry by 78.0 percent in the past year.
With a current gross margin of 45.8 percent and a net margin of 22.4 percent, you should not anticipate any slowdown in the near future. In addition, the company's recent innovation, selective tungsten deposition, has the industry abuzz.
Its Endura Volta Selective Tungsten CVD system enables semiconductors to selectively deposit tungsten in the transistor contact vias in order to decrease their resistance, boost transistor performance, and decrease power consumption. It is, in simplest terms, 3D printing at the atomic level.
2. VEECO Instruments (NASDAQ: VECO)
Veeco is a global provider of thin-film process equipment, specializing in memory and 3D transistors. LED lighting, communication networks, smart packaging, data storage, advanced computing, mobile devices, and crucial upcoming industrial applications such as artificial intelligence, machine learning, and 5G all utilize the company's technologies.
Veeco has signed an agreement with Aledia, a developer and manufacturer of next-generation micro-LED chips, even though nanotechnology has a negligible impact on the company's bottom line.
This startup creates the first nanowire chips placed on 30mm silicon wafers with the technology of CEA-Leti, a French organization devoted to sponsoring research and development of low-carbon energies and information technologies. Veeco Instruments is also experiencing an increase in clients, particularly for its metal-organic chemical vapor deposition (MOCVD) equipment, which could make the company a leader in photonics.
3. Taiwan Semiconductor Manufacturing Co. (NYSE: TSM)
Historically, chipmakers produced their own chips, and they now concentrate primarily on engineering. In contrast, foundries manage the chip manufacturing process. Taiwan Semiconductor is among the world's largest semiconductor foundries, and it produces chips for phones, game consoles, televisions, and more. Chips are in high demand. In addition, some investors view TSM as one of the top nanotechnology stocks to acquire.
TSM's partnership with Apple is one of its strongest benefits. TSM is one of Apple's largest partners, with Apple sales accounting for 25% of TSM's revenue. Typically, TSM's chips are the brains of Apple's products. For instance, when the battery life of an iPhone increases, it is typically due to an improved TSM chip.
However, TSM does not only sell to Apple. This Taiwanese corporation produces almost fifty percent of the world's semiconductors, and this supremacy allows TSM to dictate industry prices.
As previously stated, foundries cannot simply boost chip supply by pulling a lever, and the procedure is rather complex. To address this issue, TSM is constructing an entirely new factory, and this will allow the company to grow its chip production. Arizona has been selected for the construction of this $12 billion mega-facility by TSM.
Taiwan Semiconductor reported $1.59 trillion in yearly revenue for the fiscal year 2021. It also had a net income of 596 trillion Taiwanese dollars. These figures increased by 18 percent and 15 percent, respectively, year over year.
4. Cabot Microelectronics Corporation (CCMP)
CCMP was founded in 1996 for the production and sale of performance materials. The company is involved in the earliest phases of nanotechnology. CCMP serves the oil, gas, and semiconductor sectors with materials that improve their performance. Its market capitalization is $4.6 billion. As a result of the pandemic's impact on the oil and gas industry, the stock rose by just 6.3% in 2020.
Wood treatment products and chemical-mechanical polishing (CMP) slurries drove a 7.6% increase in CCMP's sales for the year ending September 30, 2020, compared to the prior year. However, the company's fourth-quarter revenue fell 1.6% year-over-year due to a 16% fall in performance materials. As the pandemic affected oil demand, demand for pipeline performance products plummeted.
As the economy recovers and oil demand increases, CCMP's revenue from performance materials will certainly increase. CCMP anticipates that its first-quarter revenue will either be unchanged or increase by low single digits, and analysts anticipate the company's fiscal 2021 revenue will increase by 3.6% annually.
The POWR Ratings endorse the forecast with a Buy rating. Trade Grade and Industry Rank are both A, and Buy & Hold Grade is a B. It also has the 72nd position within the 102-stock Semiconductor & Wireless Chip sector.
5. Onto Innovation (ONTO)
Following the 2019 combination of Nanometrics and Rudolph Technologies, ONTO was founded. ONTO provides process control equipment to semiconductor manufacturers. As Moore's law reaches its conclusion, shrinking chip size no longer improves performance and efficiency. To boost performance, firms use sophisticated packaging, in which numerous chips are placed on a single chipset.
ONTO provides lithography, step-and-repeat systems, probe card test, analysis systems, and automated defect inspection and metrology systems. Last year, ONTO's stock price increased by more than 30 percent, and the company currently has a market capitalization of $2.5 billion.
ONTO's revenue more than doubled year-over-year in the third quarter, principally attributable to a 44 percent increase in the advanced packaging and specialty device markets. The demand for process control and radio frequency modules surged in these segments, which accounted for fifty percent of the company's sales. The company anticipates fourth-quarter revenue in the range of $145 million to $155 million.
6. Intel (INTC)
Intel is the largest chipmaker in the world. The tech behemoth headquartered in Silicon Valley designs and manufactures semiconductors for the global computer and microprocessor markets. Despite falling behind in the competition for PC chip processors, Intel maintains a solid position and has diversified into a number of other business areas. The nanotechnology section is one of these sections. Mike Mayberry recently discussed the organization's goals in a segment titled "The Future of Compute" at the international VLSI conference. Several new assembling developments were discussed at the presentation, including going beyond FinFET to gate-all-around architectures or even to 2D nanosheet structures before maybe abandoning CMOS entirely. Intel will deploy nanowire/nanoribbon modifications in large quantities in five years. It may appear to be a slow progression, but the company's cutting-edge chips warrant the delay. Until further notice, financial backers can rely on outstanding stock. EPS has increased by 16.6% in the past five years, and transactions have increased by 6.5%, which is an excellent performance.
7. Dais Analytic (OTC: DYLT)
The business model of Dais Analytic has always centered on generating a positive environmental effect and enhancing global sustainability. It manufactures heating and cooling equipment that is favorable to the environment, and the company also wants to produce revolutionary devices for energy storage and water purification using nanotechnology.
These include the NanoCap, a nanotechnology-based capacitor that can replace the conventional internal combustion engine used in cars linked to the production of numerous environmental pollutants. NanoCap is also capable of powering the smart grid and consumer electronics.
The market for the new technology known as the smart grid is enormous, as enterprises and individuals seek to reduce their utility costs and carbon footprints. According to Precedence Research, this product's sales might increase by more than 15 percent between 2021 and 2030, reaching $162 billion by the conclusion of the projection period.
8. International Business Machines (NYSE: IBM)
International Business Machines, commonly known as IBM, was founded in 1911, making it one of the world's oldest technology corporations. This Fortune 500 firm stays formidable due to its ability to keep up with the times, as evidenced by its investments in rapidly expanding technology segments such as artificial intelligence and nanotechnology.
In fact, the corporation played a crucial role in the early days of nanotech when its two researchers, who went on to win the Nobel Prize in Physics, devised the scanning tunneling microscope, which allowed scientists to view atomic-scale structure formations.
In 2021, the global leader in nanotechnology released a semiconductor chip utilizing nanosheet technology on a 2-nanometer scale. This allowed IBM to benefit from the tremendous demand for semiconductors and the vast array of technologies, from autonomous vehicles to the Internet of Things, that rely on them (IoT). Long-term, IBM's capacity to expand nanotechnology could make it one of the leading nanotechnology stocks.
9. Thermo Fisher Scientific Inc. (NYSE: TMO)
Thermo Fisher Scientific Inc. is a biotechnology company that has been in business for 65 years and sells scientific instruments, reagents, and consumables. This enables the organization to leverage the healthcare and pharmaceutical industries' continued growth. According to the Industry Outlook, the market for life science reagents might reach almost $80 billion by 2030, rising by 8.3% between 2021 and the end of the projection period.
According to Research and Markets, Thermo Fisher Scientific's foray into nanotech makes them one of the major companies in the biophotonics market, alongside Toshiba and Procter & Gamble. Some anticipate that this market segment will reach a value of $63 billion by 2025, with a CAGR of 8% from 2020 to 2025.
It has also expanded relationships with numerous companies, like Moderna, in order to mass-produce mRNA-based medications, such as COVID vaccinations.
Wrapping up
Nanotechnology is an emerging subject of research in the scientific community, with numerous potential applications. For this reason, there are financial gurus who propose investing in nanotechnology-related stocks. Before opting to invest, it is a good idea to explore a variety of factors, such as completing in-depth research on the multiple subfields of nanotechnology, learning about the evolution of the industry, and becoming acquainted with the various companies participating in nanotechnology.
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