Can ASE Technology Benefit From Expanding AI Infrastructure?

ASE Technology Holding Co., Ltd. ASX is emerging as a key beneficiary of the global artificial intelligence (AI) infrastructure buildout. As demand for AI accelerators, high-bandwidth memory and advanced chip packaging grows, the company is seeing strong momentum in its semiconductor assembly, testing and advanced packaging businesses. First-quarter 2026 results reinforced this trend, with its ATM (Assembly, Testing and Material) business delivering record revenues despite a seasonally weak quarter.

AI Demand Is Fueling Advanced Packaging Growth

AI-related products are becoming an increasingly important growth engine for ASE Technology. Management noted that AI workloads are reducing the traditional seasonality of the packaging business, while demand for its LEAP advanced packaging platform, traditional advanced packaging and wirebond services remained strong throughout the first quarter. ATM revenues increased 30% year over year to a record NT$112.4 billion, supported by higher factory utilization and a richer mix of advanced packaging products. Computing applications, which include AI-related products, also continued to increase as a share of ATM revenue.

Management is responding by accelerating investments. ASE Technology raised its 2026 capital expenditure plan, increasing spending on LEAP capacity, wafer-sort capabilities and manufacturing infrastructure to support stronger-than-expected customer demand. The company now expects LEAP revenues to exceed $3.5 billion in 2026, roughly 10% above the prior guidance, while forecasting even stronger incremental growth in 2027. It also expects second-half ATM margins to move toward the upper end of its structural range as new capacity ramps up.

Although higher depreciation from new capacity investments may temporarily pressure profitability, ASE Technology's expanding AI packaging portfolio, rising computing exposure and continued customer demand position it well to benefit from the long-term expansion of AI infrastructure.

How ASE Technology Compares With Key AI Packaging Rivals

ASE Technology faces intense competition from Amkor Technology AMKR and Onto Innovation ONTO as AI infrastructure spending drives demand for advanced semiconductor packaging and testing solutions. Amkor continues to expand its advanced packaging capabilities for AI processors, high-performance computing and automotive chips through investments in flip-chip, 2.5D and 3D packaging technologies. However, Amkor remains more dependent on outsourced packaging services, whereas ASE Technology offers a broader portfolio spanning assembly, testing and electronic manufacturing services. Amkor is also investing aggressively to capture growing AI packaging demand.

Meanwhile, Onto plays a different but complementary role in the AI semiconductor ecosystem. Onto supplies advanced inspection, metrology and process control solutions that help improve yields for complex AI chips and advanced packaging. As chiplet architectures and heterogeneous integration become more sophisticated, Onto is benefiting from increasing demand for precision process control. While Onto focuses on semiconductor manufacturing equipment, ASE Technology is positioned to capitalize directly on the growing outsourced packaging and testing demand created by expanding AI infrastructure.

ASX’s Price Performance, Valuation & Estimates

ASE Technology has surged a stellar 159.9% year to date (YTD) compared with the industry’s growth of 52.9%.

From a valuation standpoint, ASX stock trades at a forward price-to-earnings (P/E) multiple of 42.28, above the industry’s average, as shown below.

ASX’s P/E Ratio (Forward 12-Month) vs. Industry

Over the past 60 days, the Zacks Consensus Estimate for ASE Technology’s 2026 earnings per share has increased to 84 cents from 77 cents. The estimated figure calls for 47.4% growth from 2025.

ASE Technology currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.See Stocks Now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ASE Technology Holding Co., Ltd. (ASX): Free Stock Analysis Report

Amkor Technology, Inc. (AMKR): Free Stock Analysis Report

Onto Innovation Inc. (ONTO): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).