Moody
Equity Investor, Semiconductor Research
Aixtron and Veeco will probably never see their old highs again, because semiconductor equipment makers look stretched above about 11x price-to-sales. Fifteen years of software multiple expansion have conditioned investors to accept high multiples, but equipment makers have very different margin structures. The broader bull market is still far from over even though fundamentals look overheated, with momentum doing the heavy lifting. x.comÂ
Some semiconductor stocks have returned to reasonable valuations as fundamentals improve, making recent declines buying opportunities. Many had traded at two to three times their median valuations; the correction brought some back toward normal, while sustained AI spending should benefit suppliers for years. x.comÂ
Semiconductors look relatively cheap against the S&P 500, while their earnings are growing much faster, barring an EPS reset. The selloff looks overdone, though that does not mean it reverses tomorrow. x.comÂ
AIXTRON reaching meme status is just a matter of time, because over 90% share in indium phosphide equipment, per @jasonschips, combined with pricing power across both optics and power semiconductors exists nowhere else. x.comÂ
AXT looks expensive against its earnings at 28x, versus the roughly 18x chip-equipment makers usually get. At 18x next year's $2.23 EPS, give or take 12%, fair value is $35.26-$44.88, so the $61.64 price is 37% above the high end, with a PEG of 12.09 flagged as bubble territory. The view uses reported earnings and estimates only, without fundamental work. x.comÂ
Semiconductor earnings will be good, supporting a likely run into Q3 results. The group looks oversold, and the Anthropic/CoreWeave news is noise. x.com x.com x.com x.comÂ
Veeco is an AI pick-and-shovel play ramping from a 2025 trough, because its laser spike annealing tools are tool-of-record for gate-all-around transistors at TSMC, Intel and Samsung. Requalification is costly, so those wins lock in demand as fabs ramp, and its annealing market should grow from ~$600 million to $1 billion-plus. Ion beam deposition, HBM packaging and the Axcelis merger add growth, with FY2026 guidance of $740-800 million revenue. The key risk is China's SAMR blocking the merger. … Show more
Semiconductor trade faces a capex growth ceiling even if AI delivers what bulls expect. Spending cannot compound at 70-100% a year indefinitely, and compute per dollar roughly doubles every two years, so the same budget buys more capacity later. Today's chip valuations also demand years of 20% AI earnings growth beyond 2028: roughly 10.9 extra years for AMD, 8.9 for ASML, 7 for Marvell and 6.4 for TSMC, versus 1.6 for Broadcom and 0.8 for Nvidia; Micron needs none under the chart's assumptions. … Show more
AI-related numbers will prove effectively made up, setting up a 'biblical' rotation out of semiconductor stocks (SOXX) by the time it is done. Confidence that the capex bubble has burst is high. x.comÂ
US semiconductor equipment makers are the sturdiest picks-and-shovels play, because any industry expansion needs equipment first, giving them a place in every bull market. In the latest US tech selloff, chip and optical stocks fell broadly, yet equipment names jumped double digits at the open and nearly all closed higher, a clear vote by investors. The group spans Applied Materials, Lam, KLA, MKS, Entegris, Onto, Nova and ACM Research, with Axcelis, Ultra Clean and Veeco strongest. x.comÂ
AI semiconductor stocks are falling because valuations priced in too much growth beyond 2026-27, not because fundamentals are worsening. With the sector ETF up more than 100% year to date at one point, Q2 earnings couldn't meet those expectations, and a crowded trade is deleveraging as everyone races for the same exit. Fundamentals are likely improving, so as positioning and valuation reset the trade can continue, but selectively. x.comÂ
