The memory industry has been one of the best-performing slices of the stock market over the past year, with leading chipmaker Micron Technology up by more than 700% to a $1 trillion market cap, and Sandisk up by more than 3,800%. Those two growth stocks likely aren't done climbing, but investors could find new opportunities for massive gains by finding the next supercycle.
While semiconductors have defined AI supercycles so far, actual AI products may govern the next one. Smart glasses could spark the next boom, and Himax Technologies (HIMX 7.65%) may be one of the best ways to play it. This under-the-radar stock has the potential to multiply shareholders' money quickly and produce a 300% return once the word gets out.
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AI smart glasses won't be just another product. These devices will be able to replace smartphones and could drive a megatrend of the same magnitude as the one triggered by the debut of the iPhone. These glasses let you take pictures, record videos, take phone calls, interact with AI models, and type on a virtual keyboard without being paired to a smartphone.
Meta Platforms is the clear leader in the niche, and launched an array of AI glasses in June. Prices start at $224, and there are multiyear plans available, so the devices are broadly accessible. Apple, Alphabet, and Amazon are all scrambling to release their own versions with augmented reality capabilities.
Some investors may think that the best way to profit from an AI glasses supercycle would be to load up on Meta Platforms, Apple, Alphabet, and Amazon now, but those stocks are not the best place to put your money. The highest returns in the space are likely to come from small companies that make the necessary components for AI glasses. That's where Himax Technologies comes into play.
Himax Technologies doesn't look like an exciting stock on the surface. Its revenues have declined year over year for consecutive quarters, and its profit margins are razor-thin. However, management's guidance suggests that this bad streak is about to end. Its projected 10% to 13% sequential growth rate in Q2 would be enough for year-over-year revenue growth, too.
Improving sequential growth is a positive, but it was the last bullet point that won over investors and encapsulated the bullish thesis: "Himax expects revenues from AI and AR glasses applications to grow substantially over the next few years."
Himax Technologies is one of the few companies with ultralow-power AI capabilities and micro displays, which are critical for smart glasses. This technology helps AI glasses function while protecting battery life, and it is a high-margin part of Himax's business.
As this segment grows, Himax can deliver higher margins that result in a more attractive valuation. The company is only achieving a profit margin of about 4% margin right now, so any progress on that front could unlock more gains and move the stock closer to a 300% return. Himax Technologies told investors in its Q1 earnings release that it expects higher gross margins, which can translate into higher net profit margins right away.
Some such progress is already in the works.
"We are pleased to share that a leading brand has adopted our WiseEye for its smart glasses," said CEO Jordan Wu during the Q1 earnings call, "with mass production expected later this year, and additional prominent brands are expected to follow." Moreover, in the Q4 2025 call, he spoke about Himax working with an "anchor customer and partner" on optical technology for AI data centers.
A detailed report from Hunterbrook Media and Citrini Research that followed patents, supply chain shifts, and investments speculates that Apple and Nvidia are the two mystery customers that Wu referred to. Those developments could lead to a rapid rerating that brings Himax Technologies closer to a 300% return as investors anticipate how the company's fundamentals would change.
Himax's technology solves problems that are central to making viable AI glasses, and many tech leaders have some exposure to this trend. Regardless of which tech giant takes the lead with its devices, Himax Technologies could grow rapidly from here.
Marc Guberti has positions in Apple. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Himax Technologies, Meta Platforms, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
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You've probably never heard of Himax Technologies, but in a few years, its products may sit at the center of a huge tech trend.
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