Pure-Play Semiconductor Supplier Stocks Portfolio UP 14% MTD: Here’s Why - ARCHIVED

An Introduction

There are only 5 pure-play semiconductor equipment and materials suppliers trading on U.S. stock exchanges that provide essential equipment for manufacturing chips such as lithography machines, etching, test and packaging equipment, automation and inspection systems and production materials such as chemicals, gases, wafers and packaging. 3 of the 5 constituents were up in 2024 (+2.4% on average) and all are UP so far in 2025 (+14.2%, on average). This article provides the specifics of those price changes MTD, in descending order, and in 2024. and the reason(s) behind them:

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MunAiMarkets Pure-Play Semiconductor Supplier Stocks Portfolio: UP 14.2% MTD; UP 2.4x% in 2024

1. KLAC Corporation (KLAC): UP 20.2% MTD; UP 8.4% in 2024
   • Company Focus:  engages in the design, manufacture, and marketing of process control, process-enabling, and yield management solutions and offers inspection and review tools to identify, locate, characterize, review, and analyze defects on various surfaces of patterned and un-patterned wafers.
   • Reasons for the Increase In Price:
     1. Increased Capital Expenditure: TSMC’s higher-than-expected capital expenditure forecast for 2025, ranging from $38 billion to $42 billion, presented a bullish growth catalyst for KLA. This increase reflects growing investments in semiconductor manufacturing, benefiting KLA, which supplies process control and yield management equipment.
     2. AI-Driven Growth: The ongoing AI boom has strengthened KLA’s position in the market. As companies like NVIDIA and AMD design AI accelerators that require advanced semiconductor capabilities, KLA’s technology is becoming increasingly critical.
     3. Positive Analyst Ratings: Analysts have highlighted KLA’s exposure to AI-driven semiconductor growth, positioning the company for sustained revenue expansion. The company’s recent revenue guidance of $2.95 billion for the current quarter, exceeding analyst expectations, further confirms its strong growth prospects.
2. Applied Materials (AMAT): UP 18.1% MTD: UP 0.3% in 2024
   • Company Focus: develops, manufactures, and sells semiconductor capital equipment that is used to fabricate semiconductor chips or integrated circuits; provides integrated solutions to optimize equipment and fab performance and productivity; and offers products for manufacturing liquid crystal displays, organic light-emitting diodes, and other display technologies.
   • Reasons for the Increase In Price:
     1. Positive Analyst Ratings: Multiple analysts upgraded their ratings for AMAT. For instance, Redburn Atlantic initiated a “Buy” rating, and Loop Capital also initiated a “Buy” rating with a price target of $360.
     2. Strong Financial Performance: Applied Materials reported impressive fiscal second-quarter results, showcasing a 21% year-over-year revenue increase, which surpassed consensus forecasts.
     3. Positive Market Sentiment: The overall positive sentiment in the tech sector and the broader market also contributed to the stock’s rise.
3. Lam Research (LRCX): UP 11.2% MTD; DOWN 7.8% in 2024
   • Company Focus:  designs, manufactures, markets, refurbishes, and services semiconductor processing equipment used in the fabrication of integrated circuits.
   • Reasons for the Increase In Price:
     1. Positive Industry Fundamentals: The semiconductor industry experienced positive tailwinds, with strong earnings reports from major players like Taiwan Semiconductor Manufacturing Company (TSMC). This signaled robust demand for semiconductor equipment, benefiting companies like Lam Research.
     2. Increased Capital Expenditure: TSMC’s higher-than-expected capital expenditure forecast for 2025, ranging from $38 billion to $42 billion, presented a bullish growth catalyst for Lam Research. This increase reflects growing investments in semiconductor manufacturing, which benefits Lam Research as a supplier of process control and yield management equipment.
     3. AI-Driven Growth: The ongoing AI boom has strengthened Lam Research’s position in the market. As companies like NVIDIA and AMD design AI accelerators that require advanced semiconductor capabilities, Lam Research’s technology is becoming increasingly critical.
     4. Positive Analyst Ratings: Analysts have highlighted Lam Research’s exposure to AI-driven semiconductor growth, positioning the company for sustained revenue expansion. The company’s recent revenue guidance of $2.95 billion for the current quarter, exceeding analyst expectations, further confirms its strong growth prospects.
4. ASML Holding (ASML): UP 9.1% MTD; DOWN 8.4% in 2024
   • Company Focus: develops, produces, markets, sells, and services advanced lithography, metrology, and inspection systems.
   • Reasons for the Increase In Price:
     1. Strong Industry Fundamentals: ASML benefited from positive tailwinds in the semiconductor industry. The company’s stock surged following Taiwan Semiconductor Manufacturing Company’s (TSMC) strong earnings report, which signaled robust demand for semiconductor equipment.
     2. Increased Capital Expenditure: TSMC’s higher-than-expected capital expenditure forecast for 2025, ranging from $38 billion to $42 billion, presented a bullish growth catalyst for ASML. This increase reflects growing investments in semiconductor manufacturing, benefiting ASML, which supplies process control and yield management equipment.
     3. AI-Driven Growth: The ongoing AI boom has strengthened ASML’s position in the market. As companies like NVIDIA and AMD design AI accelerators that require advanced semiconductor capabilities, ASML’s technology is becoming increasingly critical.
     4. Positive Analyst Ratings: Analysts have highlighted ASML’s exposure to AI-driven semiconductor growth, positioning the company for sustained revenue expansion. The company’s recent revenue guidance of $2.95 billion for the current quarter, exceeding analyst expectations, further confirms its strong growth prospects.
5. Entegris (ENTG): UP 7.4% MTD; DOWN 17.3% in 2024
   • Company Focus: develops, manufactures, and supplies micro-contamination control products, specialty chemicals, and advanced materials handling solutions to protect critical materials during manufacturing, transportation, and storage.
   • Reasons for the Increase In Price:
     1. Strong Financial Performance: Entegris reported impressive quarterly results, with a 15% increase in revenue to $1.2 billion and a 16.7% increase in net income to $210 million.
     2. Positive Analyst Ratings: Analysts have maintained a “Moderate Buy” rating for ENTG, with a consensus target price of $134.50. This positive sentiment has contributed to the stock’s rise.
     3. Dividend Announcement: The announcement of a quarterly dividend of $0.10 per share has led to an increase in the stock price.

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Conclusion

TSMC’s higher-than-expected capital expenditure forecast for 2025 has presented bullish growth catalysts for semiconductor equipment and material suppliers across the board which has been reflected in the significant increase in the price of this segment so far in 2025 but the question remains as to how long this positive investor sentiment can continue going forward give the underperformance of the sector in 2024.