Key Highlights

● Lam Research and Applied Materials both climbed strongly.

● The rally extended beyond chipmakers to equipment suppliers.

● KLA extended the rally after hours with strong guidance.

● Not every equipment-related name joined the advance.

The semiconductor rally reached beyond the chipmakers themselves to the companies that supply the machines used to make chips, as Lam Research and Applied Materials both climbed strongly, joining memory stocks in a broad advance that carried the chip index to a fourth straight gain.

The logic behind the move is straightforward, since chip-equipment makers sell the tools that chip manufacturers use to build and expand their factories, and when chipmakers report booming demand, investors expect them to spend more on new equipment to increase capacity.

The Trigger From South Korea

The trigger was SK hynix, the South Korean memory giant, which reported a more than sevenfold jump in profit and said it expects the memory shortage to last into 2030, a shortage that long could imply years of capacity expansion, requiring substantial purchases of equipment.

Lam Research is a major supplier of etch and deposition tools, critical in making memory chips, while Applied Materials offers a wide range of equipment used across chip manufacturing, with both seen as key beneficiaries when memory makers invest.

KLA Extends the Rally After Hours

The equipment rally extended into extended trading, as KLA Corp climbed after the close after reporting revenue and earnings that beat estimates and offering strong guidance tied to AI buildout demand, according to market summaries.

Not every equipment name joined in, however, with Teradyne, which makes chip-testing equipment, slipping after its guidance was seen as bracketing expectations, a reminder that the rally was not universal.