Semiconductor-related stocks surged Thursday, and leading the pack were stocks of the companies that make the equipment used to make chips.
Late Wednesday, Lam Research Inc.
LRCX,
reported strong earnings and its CEO said that artificial-intelligence servers are “fundamental” to driving growth over the next several years.
On Thursday, Lam shares rallied 11%, compared with a 4% gain on the PHLX Semiconductor Index
SOX,
a 0.6% gain by the S&P 500
SPX,
and a 1.1% rise by the tech-heavy Nasdaq Composite Index
COMP,
That comes as Texas Instruments Inc.
TXN,
which uses its own foundries, said recently that it would keep building out its own capacity even as inventory grows amid declining sales and profits.
Lam’s smaller rival KLA Corp.
KLAC,
which is scheduled to release earnings after the bell Thursday, saw its shares surge 8%. Analysts surveyed by FactSet expect KLA to report $4.86 a share on revenue of $2.26 billion.
Meanwhile, shares of other makers of wafer fab equipment, or WFE, also surged, with Applied Materials Inc.
AMAT,
up 8% and ASML Holding NV
ASML,
up 5%.
Read: Intel earnings: Here are the numbers to watch
In a Thursday note, Citi Research analyst Atif Malik said Lam’s “beat and raise” report was “leading the group out of the downturn,” as it posted the first positive change to WFE spending with a forecast of $75 billion, up from a previous forecast in the low-to-mid $70 billion range.
“We believe Lam’s memory exposure, an end market that typically leads the downturn and upturn, makes it the best proxy to lead the group out of the downturn,” Malik said. Memory customers with their own foundries include Micron Technology Inc.
MU,
This post was originally published on Market Watch
