In this article, we will discuss the 11 Best Semiconductor Equipment Stocks to Buy According to Analysts.
As per Straits Research, the US semiconductor manufacturing equipment market size was pegged at US$13.2 billion in 2024. It is expected to grow from US$13.5 billion in 2025 to US$16.5 billion by 2033. This growth is expected to stem from increasing investments in domestic semiconductor manufacturing and the higher demand for advanced semiconductors in critical sectors, including artificial intelligence (AI), 5G, and EVs.
Market Drivers for Semiconductor Manufacturing Equipment
Straits Research highlighted that the resurgence of semiconductor manufacturing in the US is aided by the government initiatives. The federal push is targeted at reducing the dependency on Asian imports as well as strengthening the domestic supply chains. Leading companies continue to establish new fabs in the US, which helps create demand for advanced wafer manufacturing and fabrication equipment. Overall, the increased requirement for high-performance chips in sectors including defense, telecommunications, and automotive further cements the growth of semiconductor equipment.
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Growth Opportunities for Semiconductor Equipment
The rapid adoption of AI and 5G technologies in the United States continues to present strong opportunities for the broader semiconductor manufacturing equipment market, highlighted Straits Research. AI chips, primarily the ones utilized in data centers and autonomous vehicles, need advanced manufacturing techniques, fueling demand for cutting-edge equipment. Furthermore, the launch of 5G networks has been driving rapid production of semiconductors, which are capable of handling higher data transmission rates, further enhancing the need for advanced fabrication technology. The US is well-placed as a leader in AI and 5G development, with leading companies driving innovation, demonstrating strong growth potential.
KPMG believes that Al is now the most important application fueling semiconductor companies’ revenue as businesses continue to incorporate the technology in their digital transformations. As a result, the spending on Al semiconductors is projected to be $174 billion in 2025, which is expected to increase to $280 billion in 2028. KPMG also highlighted that semiconductor leaders opine that Al enablers (which include high-bandwidth memory) are the production technology that can have an impact on the broader industry over the upcoming 3 years. In an era in which Al applications are present in all the industries – ranging from autonomous vehicles to healthcare diagnostics, household devices to personalized recommendations—there remains a higher demand for semiconductors aiding Al capabilities.
Amidst such trends, let us now have a look at the 11 Best Semiconductor Equipment Stocks to Buy According to Analysts.
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Our Methodology
To list the 11 Best Semiconductor Equipment Stocks to Buy According to Analysts, we used a screener to shortlist the companies catering to the broader semiconductor equipment market. Next, we filtered out the stocks that analysts see significant upside to. The stocks are arranged in ascending order of their average upside potential, as of April 9. We also mentioned the hedge fund sentiments around each stock, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
11 Best Semiconductor Equipment Stocks to Buy According to Analysts
11. KLA Corporation (NASDAQ:KLAC)
Average Upside Potential: ~27.3%
Number of Hedge Fund Holders: 58
KLA Corporation (NASDAQ:KLAC) designs and manufactures yield-management and process-monitoring diagnostic and control systems for the broader semiconductor industry. The company has had its stock upgraded from “Equalweight” to “Overweight” by Morgan Stanley. This was backed by a favourable outlook on the company’s growth potential in the wafer fabrication equipment (WFE) sector. As per the analysis, KLA Corporation (NASDAQ:KLAC) is expected to outperform the WFE market.
The firm’s confidence in KLA Corporation (NASDAQ:KLAC) stems from 2 main drivers. Firstly, Morgan Stanley highlighted the process control intensity as a critical factor, which is expected to witness a structural increase. Secondly, the firm’s optimism stems from KLA Corporation (NASDAQ:KLAC)’s potential for market share gains in process control. As per the firm, the company’s position, together with its fundamental technology and data processing capabilities, can allow it to continue to enhance its market share. The company’s continued innovation in process control and yield management solutions places it well to benefit from increasing semiconductor manufacturing complexity, which includes the adoption of EUV layers and the shift to smaller node sizes.
Parnassus Investments, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“We also added several new positions, including two in Information Technology: Workday, a category leader for enterprise cloud applications for finance and human resources, and KLA Corporation (NASDAQ:KLAC), a leader in semiconductor process control. KLA, a leader in semiconductor process control, benefits from inherently high switching costs, structurally higher demand for advanced semiconductors and increasingly complex semiconductor manufacturing. The company has a strong management team that is positioning it well for long-term growth. Concerns about weaker demand in China have impacted KLA’s stock price recently, but we believe the secular growth in other regions could offset the risk in the longer term.”
10. ASML Holding N.V. (NASDAQ:ASML)
Average Upside Potential: ~37.3%
Number of Hedge Fund Holders: 86
ASML Holding N.V. (NASDAQ:ASML) offers lithography solutions for the development, production, marketing, sales, upgrading, as well as servicing of advanced semiconductor equipment systems. Didier Scemama, an analyst from Bank of America Securities, maintained a “Buy” rating on the company’s stock. The rating is backed by a combination of factors demonstrating its position in the broader semiconductor industry. As per the analyst, one of the main reasons revolves around the expected increase in lithography intensity, with the industry moving beyond 2nm nodes.
Furthermore, the structural advantages of well-established foundries such as TSMC, which are the early adopters of multi-patterning EUV, aid ASML Holding N.V. (NASDAQ:ASML)’s market position. Also, the emergence of an EUV ecosystem in China highlights the increasing global demand for EUV technology, says the analyst. Elsewhere, Krish Sankar, an analyst from TD Cowen, maintained a “Buy” on ASML Holding N.V. (NASDAQ:ASML)’s stock. This rating was backed by factors demonstrating the company’s leading position in the lithography market, which remains crucial for addressing challenges in both foundry as well as logic sectors.
Generation Investment Management, an investment management firm, released its Q4 2024 investor letter. Here is what the fund said:
“ASML Holding N.V. (NASDAQ:ASML), a Dutch company and a recent addition to our portfolio, is a critical enabler of the semiconductor industry. They provide advanced lithography equipment, which is essential for producing semiconductors. As demand for chips accelerates – driven by AI, electrification and broader applications across the economy – ASML stands to benefit significantly.
ASML operates in a near-monopolistic position in lithography machines, thanks to decades of engineering expertise and innovation. Over the past five years, the company has grown revenues at 20% annually. We expect the company’s revenue growth to moderate but continue to grow strongly, in line with the semiconductor industry. Margins are likely to expand over time, underscoring ASML’s high quality and earnings potential.
There are risks. Short-term volatility in orders, and geopolitical trade restrictions, could affect growth. Over the long term, disruptive innovation outside of lithography poses a challenge, though we believe ASML’s position is secure. We therefore find the valuation of the company attractive. We are confident in its ability to compound value over the coming years.”
9. Applied Materials, Inc. (NASDAQ:AMAT)
Average Upside Potential: ~46.1%
Number of Hedge Fund Holders: 80
Applied Materials, Inc. (NASDAQ:AMAT) is engaged in providing manufacturing equipment, services, and software to the semiconductor, display, and associated industries. Jefferies analysts upped the company’s stock to “Buy” from “Hold” with a price objective of $195, up from the previous target of $185. This upgrade was backed by recovering demand, which can help the company’s stock to continue to rise despite the US-China trade tensions. The analysts, led by Blayne Curtis, highlighted the pivoting of macro conditions, which includes a recovery in DRAM and NAND memory demand. Jefferies also believes that Applied Materials, Inc. (NASDAQ:AMAT) remains well-placed to benefit from trends to shift semiconductor supply chains to the US.
Applied Materials, Inc. (NASDAQ:AMAT) is expected to capitalize on the AI-driven semiconductor boom, which offers a strong growth opportunity. The elevated demand for AI applications throughout industries continues to fuel the need for more advanced and specialized semiconductor chips, which, in turn, need more sophisticated manufacturing equipment. Therefore, Applied Materials, Inc. (NASDAQ:AMAT)’s expertise in materials engineering and its broad portfolio of technologies remain in line with the needs of AI chip production.
Vltava Fund, an investment management company, recently published its Q4 2024 investor letter. Here is what the fund said:
“In the quarter just ended, we added to the portfolio two new companies from the technology sector: Applied Materials, Inc. (NASDAQ:AMAT) and Lam Research. Both are in the same industry as is another of our investments that we have held for some time, KLA Corporation. This industry is termed semiconductor devices and materials. One chapter in Hidden Investment Treasures is devoted to investing in technology companies and, among other things, the controversy over what really constitutes a technology company. As investors, we try to view technology companies not according to the industry into which they are formally classified but by whether the technologies and technological processes used in the production of their products and services are an essential element in value creation or if they are a source of long-term, sustainable competitive advantage. Among the companies that are formally categorized as technology-based and fall into either the Information Technology or the Communications Services sector, we find some that can be said to be just that but also others for which this classification is at least debatable. Similarly, among companies that do not formally belong to these two sectors, we find many that clearly are built to a large extent on technology and base their market positions and competitiveness on it. In the cases of Applied Materials and Lam Research, there can be no doubt that these are technology companies not only as a formality but also in fact.
Applied Materials provides manufacturing equipment, services, and software for the semiconductor, display, and related industries. Its principal business activities are semiconductor systems and Applied Global Services. Its largest customers are Samsung and Taiwan Semiconductors, but its overall clientele is more diversified than is that of Lam Research. At first glance, it would appear that Applied Materials has a somewhat less tangible and definable competitive advantage compared to KLA Corporation and Lam Research, but the numbers do not support such a view. Net margins likewise in the neighborhood of 27% and ROCE around 30% are outstanding. Basically, it can be said that all three companies we own have very similar underlying profitability metrics. Even their valuations, growth, and potential are similar. All have strong free cash flow and strong balance sheets, and they are regularly buying back their own shares over the long term and in large volumes…” (Click here to read the full text)
8. Lam Research Corporation (NASDAQ:LRCX)
Average Upside Potential: ~51.5%
Number of Hedge Fund Holders: 84
Lam Research Corporation (NASDAQ:LRCX) is engaged in designing, manufacturing, marketing, refurbishing, and servicing semiconductor processing equipment utilized in the fabrication of integrated circuits. Oppenheimer initiated the coverage of the company’s shares with an “Outperform” rating and a price objective of $95. The firm cited Lam Research Corporation (NASDAQ:LRCX)’s dominant position in etch technology and growth potential from NAND upgrades and AI-related demand. The company remains well-placed to benefit as NAND enters a large upgrade cycle, while DRAM remains a bottleneck for the AI compute.
Elsewhere, Cantor Fitzgerald reiterated an “Overweight” rating and the price objective of $100, lauding Lam Research Corporation (NASDAQ:LRCX)’s strategy to enhance its share in the wafer fabrication equipment market. As per Lam Research Corporation (NASDAQ:LRCX), higher demands on chip performance play into its strengths, with advanced deposition and etch applications well-placed to comprise a growing share of WFE. Vltava Fund, an investment management company, published its Q4 2024 investor letter. Here is what the fund said:
“In the quarter just ended, we added to the portfolio two new companies from the technology sector: Applied Materials and Lam Research Corporation (NASDAQ:LRCX). Both are in the same industry as is another of our investments that we have held for some time, KLA Corporation. This industry is termed semiconductor devices and materials. One chapter in Hidden Investment Treasures is devoted to investing in technology companies and, among other things, the controversy over what really constitutes a technology company. As investors, we try to view technology companies not according to the industry into which they are formally classified but by whether the technologies and technological processes used in the production of their products and services are an essential element in value creation or if they are a source of long-term, sustainable competitive advantage. Among the companies that are formally categorized as technology-based and fall into either the Information Technology or the Communications Services sector, we find some that can be said to be just that but also others for which this classification is at least debatable. Similarly, among companies that do not formally belong to these two sectors, we find many that clearly are built to a large extent on technology and base their market positions and competitiveness on it. In the cases of Applied Materials and Lam Research, there can be no doubt that these are technology companies not only as a formality but also in fact.
Dozens of companies are directly or indirectly involved in the production of semiconductors. Within this broad group of companies, there are several without which it would not be possible to produce advanced types of semiconductors in the world today. These include a group of five very well-known companies, each of which has a dominant global position in its particular field, and which together operate more or less as oligopolies. These are Lam Research, Applied Materials, KLA Corporation, ASML, and Tokyo Electron. At the end of the year, we benefited from a significant correction in the share prices of Applied Materials and Lam Research, and, together with KLA Corporation, we now own three of them. We view these as one collective investment into a critical point within a very important segment of the global economy that is growing and will continue to grow over the long term.
Lam Research manufactures wafer fabrication equipment for the semiconductor industry and also provides related services. The company is a market leader in plasma etching, thin film deposition platforms, photoresist systems, as well as wet and plasma-based cleaning products for individual wafers. Its main customers are the four major semiconductor manufacturers Micron, Samsung, SK Hynix, and Taiwan Semiconductors. Lam Research is a business with net margins of around 27% and ROCE of about 30%. Capital outlays are relatively small. The company has good capital allocation with a preponderance of share buybacks…” (Click here to read the full text)
7. Teradyne, Inc. (NASDAQ:TER)
Average Upside Potential: ~52.4%
Number of Hedge Fund Holders: 61
Teradyne, Inc. (NASDAQ:TER) offers testing equipment, which includes automated test equipment for semiconductors system testing for hard disk drives, circuit boards, and electronics systems, and wireless testing for devices. Analyst Krish Sankar of TD Cowen maintained a “Buy” rating on the company’s stock. The analyst’s rating is backed by factors highlighting the growth potential and recovery. Despite the challenges, the company expects a recovery in H2 of the year, which can be driven by improvements in the semiconductor test market. As per the analyst, Teradyne, Inc. (NASDAQ:TER)’s long-term growth prospects are promising, with an emphasis on expanding the Industrial Automation division. The company continues to roll out new products and seeks to increase its market share and targets CAGR, which exceeds the industry peers, says Sankar.
Teradyne, Inc. (NASDAQ:TER) remains well-placed to benefit from the recovery in smartphone units and the higher adoption of leading-edge nodes in semiconductor manufacturing. The industrial sector, which includes automotive manufacturing, exhibits another area for potential growth. With industrial automation advancing and the automotive industry shifting toward electric and autonomous vehicles, the demand for semiconductor components in such applications can increase. This trend can also result in higher demand for Teradyne, Inc. (NASDAQ:TER)’s testing solutions.
Furthermore, the pivot to leading-edge nodes in semiconductor manufacturing throughout sectors can fuel demand for the company’s advanced testing equipment. Parnassus Investments, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“Teradyne, Inc. (NASDAQ:TER), a supplier of automated test equipment for semiconductors, was affected by a broad sell-off in semiconductor-related stocks. We see some “green shoots” in demand and believe Teradyne is well positioned as artificial intelligence moves to smartphones and PCs.”
6. FormFactor, Inc. (NASDAQ:FORM)
Average Upside Potential: ~65.3%
Number of Hedge Fund Holders: 26
FormFactor, Inc. (NASDAQ:FORM) is engaged in designing, developing, manufacturing, selling and supporting semiconductor probe card products. The company announced that, together with MBK Partners (the largest PE firm in North Asia), it is acquiring FICT Limited from Advantage Partners Inc. FICT has been providing the semiconductor test and high-performance computing industries with complex multi-layer organic substrates, printed circuit boards, and related leading-edge technologies and services. With the transaction, FormFactor, Inc. (NASDAQ: FORM) invests ~US$60 million into the consortium.
As per FormFactor, Inc. (NASDAQ:FORM)’s Chief Executive, the semiconductor industry’s rapidly accelerating adoption of advanced packaging needs higher investment and stronger collaboration throughout the test and assembly supply chain. Overall, the growth in the semiconductor market, mainly in domains including HBM fueled by Al, significantly aided FormFactor, Inc. (NASDAQ: FORM). Moving forward, its investments and emphasis on advanced testing solutions place it well to reap the benefits of emerging industry trends, fuelling strong growth in the broader semiconductor testing industry.
TimesSquare Capital Management, an equity investment management company, released its Q2 2024 investor letter. Here is what the fund said:
“Among the wide variety of Information Technology companies, we prefer critical system providers, specialized component designers, systems that improve productivity or efficiency for their clients, and others that closely tie to increasing shares of corporate IT budgets. FormFactor, Inc. (NASDAQ:FORM) offers probe cards to test semiconductors. Its shares jumped 33% on the combination of a solid quarter along with second quarter guidance well ahead of Street projections. This stems from high bandwidth memory (HBM) and as well as foundry & logic demand for probe cards. HBM is fueled by AI spending while foundry & logic is tied to new microprocessor design ramps.”
5. Nova Ltd. (NASDAQ:NVMI)
Average Upside Potential: ~69.9%
Number of Hedge Fund Holders: 26
Nova Ltd. (NASDAQ:NVMI) designs, develops, produces, and sells process control systems utilised in the manufacturing of semiconductors. The company has seen broad adoption of its comprehensive portfolios. As per the firm, leading foundries, logic, and memory manufacturers continue to integrate multiple NOVA solutions from its optical dimensions, materials, and chemical metrology portfolio. Therefore, the adoption cements its ability to address the complex metrology challenges associated when manufacturing the most advanced semiconductor nodes. Nova Ltd. (NASDAQ:NVMI) has completed the acquisition of Sentronics Metrology GmbH, which is a global provider of wafer metrology tools for backend semiconductor fabrication.
Nova Ltd. (NASDAQ:NVMI) expects the acquisition to be accretive on a non-GAAP net earnings basis in the 12 months of closing. The Sentronics portfolio expands the company’s presence in the broader range of applications and wafer sizes and types beyond 300mm silicon wafers. Overall, the growth in the semiconductor equipment market supports Nova Ltd. (NASDAQ:NVMI) by improving demand for its advanced metrology solutions. These are important for controlling critical dimensions as well as materials in next-gen chip manufacturing.
Invesco Distributors, Inc., an investment management firm, released Q2 2024 investor letter. Here is what the fund said:
“Nova Ltd. (NASDAQ:NVMI) provides integrated monitoring and process control systems for other integrated circuit manufacturing processes. Wafer fab spending has been on the rise due to high memory prices and AI spending, resulting in strong earnings results for Nova.”
4. Camtek Ltd. (NASDAQ:CAMT)
Average Upside Potential: ~82.4%
Number of Hedge Fund Holders: 21
Camtek Ltd. (NASDAQ:CAMT) is engaged in developing, manufacturing, and selling inspection and metrology equipment for the semiconductor industry. The company has demonstrated numerous competitive advantages that help it stand apart in the broader semiconductor equipment market. Its capability to consistently surpass market expectations reflects a healthy operational efficiency and technological edge. In Q4 2024, the company’s revenues came in at $117.3 million as compared to $88.7 million in Q4 2023, reflecting a YoY growth of 32%. The growing demand for Al placed Camtek Ltd. (NASDAQ:CAMT) as a leader and facilitated its significant growth in 2024.
Camtek Ltd. (NASDAQ:CAMT)’s resilience against concerns impacting the broader semiconductor industry highlights that it has unique strategies or technologies that provide a buffer against industry-wide headwinds. The resilience stems from its diversified product portfolio, healthy customer relationships, or proprietary technologies that give the company an advantage in certain market niches. Camtek Ltd. (NASDAQ:CAMT)’s emphasis on advanced packaging and metrology solutions can help it benefit from the increased complexity of semiconductor manufacturing processes.
With chip designs becoming intricate and performance requirements demanding, the company’s specialized equipment becomes important to semiconductor manufacturers. This can result in stronger customer relationships and sustained demand for Camtek Ltd. (NASDAQ:CAMT)’s products. The company plans to capitalize on the increased need for Al applications, which require significant investments in high-performance computing (HPC) hardware.
3. Entegris, Inc. (NASDAQ:ENTG)
Average Upside Potential: ~86.4%
Number of Hedge Fund Holders: 47
Entegris, Inc. (NASDAQ:ENTG) offers advanced materials and process solutions for the semiconductor and other high-tech industries. Fitch Ratings believes that the company remains well-placed to maintain a key role in the broader semiconductor market with the increased complexity of architectures. Entegris, Inc. (NASDAQ:ENTG)’s customer relationships and collaboration offer expansion opportunities, with increased AI and machine learning requirements affecting the semiconductor market growth.
Elsewhere, Citi believes that the expected outperformance in 2025 can be fueled by node transitions in advanced logic and 3D NAND technologies, together with strong growth in advanced packaging. Entegris, Inc. (NASDAQ:ENTG) remains confident in the healthy long-term growth outlook of the broader semiconductor industry. The industry’s technology roadmaps remain opportunity-rich for the company as its customers drive for more complex device architectures and further miniaturization. Therefore, the resulting process complexity continues to make Entegris, Inc. (NASDAQ:ENTG)’s expertise in materials science and materials purity increasingly valuable, placing it well for the upcoming technology node transitions.
The London Company, an investment management company, released a Q4 2024 investor letter. Here is what the fund said:
“Entegris, Inc. (NASDAQ:ENTG) – ENTG underperformed during 4Q due to a more sluggish market recovery, particularly in mainstream and 3D NAND areas, as well as providing a cautious outlook. That said, its solutions for advanced technology and incremental wafer content gains should propel a faster recovery next year. ENTG is one of the most diversified players in the semi-materials industry with its size and scale. We remain attracted to the industry’s high barriers to entry, limited competitors, and high switching costs.”
2. ACM Research, Inc. (NASDAQ:ACMR)
Average Upside Potential: ~91.8%
Number of Hedge Fund Holders: 23
ACM Research, Inc. (NASDAQ:ACMR) is engaged in developing, manufacturing, and selling semiconductor process equipment. JPMorgan analyst Jimmy Huang initiated coverage of the company’s stock with an “Overweight” rating and a price objective of $36. As per the firm, the company’s breakthrough in sulfuric peroxide mix cleaning is expected to fuel significant revenue upside and ease the market concerns of competition from Chinese peers. Notably, ACM Research, Inc. (NASDAQ:ACMR) announced that its Single-Wafer High-Temperature Sulfuric Peroxide Mixture (SPM) tool has been qualified by a key logic device manufacturer in mainland China. As per the release dated March 3, the company delivered its SPM tools to thirteen customers.
The Single-Wafer Moderate/High-Temperature SPM tool remains a critical example of the company’s commitment to innovation in solving customers’ problems in high-volume 300mm semiconductor manufacturing. The Moderate/High-Temperature SPM exhibits a growing portion of the wafer-cleaning equipment market, mainly the High-Temperature SPM tool, which plays an important role in manufacturing next-gen semiconductor devices. Overall, ACM Research, Inc. (NASDAQ:ACMR) continues to witness robust growth because of increased demand for advanced semiconductor manufacturing equipment, mainly fueled by Al and HPC, which needs complex and precise wafer-cleaning as well as packaging solutions.
1. Onto Innovation Inc. (NYSE:ONTO)
Average Upside Potential: ~102.7%
Number of Hedge Fund Holders: 50
Onto Innovation Inc. (NYSE:ONTO) is a leading player in the broader semiconductor industry as it specializes in design, manufacturing, development, and support of metrology as well as inspection tools critical for the semiconductor device fabrication. Stifel analysts maintained a “Buy” rating on the company’s stock, with the firm expecting growth in 2025 to be mainly aided by its wafer fabrication equipment (WFE)-oriented advanced nodes business. This business continues to gain traction in terms of customer, market, and product momentum.
The firm’s analysts believe that Onto Innovation Inc. (NYSE:ONTO) will outperform the overall industry growth in 2025, thanks to the strategies to penetrate new market opportunities as well as defend the existing positions. Overall, the growth in the semiconductor equipment market continues to fuel demand for Onto Innovation Inc. (NYSE:ONTO)’s advanced metrology, inspection, and lithography tools, with chipmakers continuing to adopt complex manufacturing processes and enhance the global fab capacity. Furthermore, dynamic trends, including AI and specialty semiconductors, have been enhancing its total addressable market.
Invesco Distributors, Inc., an investment management firm, released its Q4 2024 investor letter. Here is what the fund said:
“Onto Innovation Inc. (NYSE:ONTO): The company is a semiconductor capital equipment manufacturer that provides process control solutions for microelectronics manufacturing, including defect inspection, metrology systems and software to enhance yield and reduce costs. The company has benefited from the artificial intelligence (AI) boom, but weakness during the quarter provided an attractive entry point for the fund.”
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