1 Under-the-Radar Stock Riding the AI Boom (Hint: It's Not Nvidia)

Artificial intelligence (AI) investors usually start with Nvidia. That makes sense. The chipmaker sells the graphics processing units (GPUs) that have become the defining hardware of the AI boom.

But the AI supply chain doesn't stop with the chip designer. As accelerators become more complex, semiconductor companies increasingly need advanced packaging -- the step that helps multiple pieces of silicon, memory, and other components work together inside one finished device.

That is where Amkor Technology (NASDAQ: AMKR) comes in.

Shares of Amkor have more than doubled in 2026 as of this writing, helped by rising interest in advanced packaging and a new 10-year agreement with Taiwan Semiconductor Manufacturing. The move has turned a relatively quiet packaging and test company into one of the more interesting ways to play AI infrastructure without buying Nvidia.

So, is the stock still worth buying after such a big run?

Image source: Getty Images.

Amkor's role in AI chips

Amkor is an outsourced semiconductor assembly and test (OSAT) provider. In simpler terms, chip companies and foundries use Amkor to help package and test chips before they make their way into end products.

The company's latest quarter showed why investors are paying attention. Amkor's first-quarter revenue rose 27% year over year to a first-quarter record $1.68 billion. Advanced products, which include flip chip, memory, and wafer-level processing, accounted for $1.37 billion of that revenue. Computing, which includes data center, infrastructure, PCs, laptops, and storage, represented 21% of net sales.

Even more, management said revenue from AI data center applications reached a record in the quarter, driven by strength across multiple customers.

"Leading chip companies continue to trust us for their advanced packaging and test needs," said Amkor CEO Kevin Engel in the company's first-quarter earnings call.

Amkor isn't trying to displace Nvidia. It is trying to become a more important partner to the companies building increasingly complicated chips.

The company's investments line up with that opportunity. Management said it continues to invest in high-density fan-out (HDFO), flip chip, and test capabilities, calling these technologies critical to next-generation AI and high-performance computing. A new HDFO data center CPU program was expected to start ramping in the second quarter, with more meaningful revenue contribution in the third quarter.

Then there is Arizona.

On Tuesday, Amkor and TSMC announced a 10-year agreement under which TSMC can procure advanced packaging and testing services from Amkor in Arizona. Amkor's Arizona campus is expected to support key customers, including Apple and Nvidia, with the first manufacturing facility expected to be completed in mid-2027 and production beginning in early 2028.

The risks aren't small

The problem for investors is that the market has already noticed.

At about $87 per share as of this writing, Amkor trades at about 50 times earnings. That is a rich valuation for a cyclical semiconductor supplier, even for one with a compelling AI-related growth story. It also leaves less room for disappointment if the advanced packaging ramp takes longer than investors expect.

To Amkor's credit, the near-term outlook is strong. Management guided for second-quarter revenue of $1.75 billion to $1.85 billion and earnings per share of $0.42 to $0.52. At the midpoint, both figures would be even higher than Amkor's strong first-quarter results.

But the opportunity is capital-intensive. Amkor expects 2026 capital expenditures of $2.5 billion to $3.0 billion. Management said 65% to 70% of that spending is projected for facilities expansion, including Phase 1 of the Arizona campus, while 30% to 35% is projected for HDFO, test, and other advanced packaging capacity.

That spending could pay off. But it also raises execution risk. Management expects start-up costs tied to Arizona to begin diluting operating income margin by 1 to 2 percentage points in 2027 before improving in 2028.

There is also customer-concentration risk. Amkor's top 10 customers accounted for 68% of net sales in the first quarter. That can be great when big customers are leaning into new programs. But it can hurt quickly if demand shifts or a customer uses another supplier.

Overall, Amkor is a fascinating AI infrastructure stock. It gives investors exposure to a real bottleneck in the semiconductor supply chain, and its TSMC agreement makes the Arizona story more credible. But after the stock's huge run, I wouldn't chase it aggressively here.

With that said, for investors who want a one-layer-deeper AI stock, Amkor deserves a spot on the watch list.

Daniel Sparks and his clients have positions in Apple. The Motley Fool has positions in and recommends Apple, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.