Chip Stocks Exit 21-Day Bear Market Led by Surprising Equipment Name

The chip sector's 21-day bear market ended abruptly this week as a surprising equipment stock led a rotation into a new bull run, with the SOXX semiconductor ETF climbing 1.58 percent to $559.12 even as the S&P 500 slipped 0.52 percent.

"The equipment layer often outperforms most sharply when earnings beats arrive," said Jay Goldberg, analyst at Seaport Research, who raised his Applied Materials price target to $575 from $500 after the company posted record quarterly revenue.

Applied Materials anchored the move, rising 5.55 percent to $535.31 after reporting record fiscal Q3 revenue of $9.12 billion and guiding Q4 to a range of $9.75 billion to $10.75 billion. ACM Research surged 6.49 percent to $85.64, Teradyne gained 5.81 percent to $443.14, and Micron Technology crossed the $1,000 mark for the first time, closing at $1,011.75 — up 220.76 percent year to date.

The reversal matters because it shows AI infrastructure spending is broadening beyond the mega-cap names that drove earlier gains, with Nvidia's Aug. 26 earnings report the next test of whether the sector's momentum can hold.

Applied Materials' Record Quarter Anchors the Equipment Rally

Applied Materials' fiscal Q3 revenue of $9.12 billion marked a record for the company, and its Q4 guidance of $9.75 billion to $10.75 billion suggests AI-driven fab investment is accelerating rather than plateauing. The company is up 99.10 percent year to date, and among 38 analysts covering the stock, the consensus rating is "Strong Buy." UBS maintained its Buy rating at a $675 target.

The equipment rally extended across the supply chain. ACM Research, which supplies wafer-cleaning tools primarily to fabs in mainland China, climbed 6.49 percent to $85.64 on heavy volume after reporting Q2 earnings that beat analyst expectations and lifting full-year guidance. The analyst consensus target sits at $115.14, implying 34.5 percent upside, on a "Buy" consensus from eight covering analysts. Teradyne, the test and automation equipment maker, added 5.81 percent to $443.14, extending a one-month gain of 32.77 percent after reporting record Q2 results with revenue more than doubling year over year.

Micron Crosses $1,000 as Memory Demand Tracks AI Buildout

Micron Technology crossed the $1,000 per-share mark Monday, climbing 4.13 percent to $1,011.75. Up 220.76 percent year to date, Micron is one of only three global suppliers of high-bandwidth memory (HBM), the memory type required for every large language model run. Its five-day gain of 16.49 percent suggests the market is pricing in a supply-demand inflection as AI training clusters at Microsoft, Google and Amazon pull forward memory orders.

The rotation into hardware came at the expense of software names. ServiceNow dropped 5.08 percent to $117.70, monday.com fell 4.79 percent to $83.33, and Meta Platforms shed 3.54 percent to $568.97 as investors weighed heavy AI capital spending against uncertain near-term monetization. Lam Research added 3.45 percent to $343.84, ASML gained 2.12 percent to $1,883.12, and Taiwan Semiconductor Manufacturing rose 1.08 percent to $430.97 — a clean sweep for the equipment and foundry group against a weak market.

The sector's 21-day bear market reversal carries a caveat: the good news ends on Tuesday. Nvidia's Aug. 26 earnings report, with consensus revenue at $28.7 billion, remains the single biggest near-term event for the entire AI chip universe. Applied Materials, trading near record levels after a 99 percent year-to-date gain, leaves little margin for error if guidance disappoints. Investors holding equipment names should watch whether the broadening rally persists or reverts to the narrow concentration that characterized earlier phases of this bull market.

This article is for informational purposes only and does not constitute investment advice.