Dr. Stoxx
Stock Trader & Author, Oxford DPhil, Trading Education
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
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
Chemicals are an obvious, overlooked layer of the AI buildout, and most of the stocks have not moved yet. Entegris is the purity play inside TSMC's Arizona fab, where one contaminant can ruin a $30,000 package. MKS supplies specialty chemicals for advanced packaging, Rogers is an indirect play on optical transceivers and high-speed switches, and Element Solutions is the most direct advanced-packaging play, with organic growth the highest since COVID. Chemours belongs in the group too. x.com … Show more
Entegris sits deep in the semiconductor supply chain, supplying critical materials and process solutions used in advanced chip manufacturing, especially for chips and HBM memory. EPS is expected to scale from $1.6 to $4.8 over the next three years, and the stock has built a 4+ year base with clear accumulation. x.comÂ
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
The OpenAI ecosystem is lifting a broad supply chain, from Microsoft's $300B and Oracle's $200B backlogs to Nvidia and AMD, whose MI450 has a massive customer. Micron trades at 7x earnings that are still rising, Korean memory is fully sold out and TSMC is king. ASML has no capacity for the next 12 months, Lam is the best memory supplier and KLA the best equipment maker, while Applied Materials depends on China returning given 40% exposure. Optical, chemical and test suppliers also gain. x.comÂ
Semtech remains a Buy with a $162 target at 22x FY28 EPS, as AI demand runs about three times its supply capacity. F2Q revenue rose 33% YoY to $341.9M, EPS of $0.71 beat $0.61, gross margin hit a record 54.5%, and F3Q guidance of $410M revenue and $1.02-1.08 EPS tops estimates. 1.6T CopperEdge ACC is now in mass shipment to major hyperscalers, and FiberEdge targets over 50% of its 1.6T market by end-FY27. SiGe/InP wafer and packaging limits are the bottleneck; FY28 EPS is forecast at $7.40. … Show more
Semiconductor stocks have not priced in a record wave of AI chip demand. Taiwan chip exports jumped over 20% in a single month and demand is 30% above three months earlier, the biggest in history, while Korea is also seeing record semiconductor demand, up 30% on mid-2026. A step change in demand comes while semis are still cheaper than before the AI boom. x.com x.com x.com x.comÂ
Applied Materials' record revenue and Q4 guidance show strong AI equipment demand, and the median analyst target implies 42.9% upside over the next 12 months. x.comÂ
indie Semiconductor is one of the best high-beta semiconductor names still on sale, so it should eventually go ballistic if the broader semiconductor market does again. x.comÂ