Chip toolmakers like Teradyne and Lam Research double amid AI boom

AI-focused investors are increasingly turning to lesser-known semiconductor equipment suppliers as chip stocks soar to expensive valuations. Companies like Teradyne, Lam Research, and KLA Corp—which make the tools and machines used to manufacture semiconductors—have emerged as standout performers, with some stocks nearly doubling since spring as traders seek new ways to capitalize on the AI boom.

What you should know: Semiconductor equipment makers are outperforming many traditional chip stocks as investors hunt for AI exposure beyond the most obvious plays.

• Teradyne Inc., which provides chip testing tools during manufacturing, has nearly doubled from its April low and gained more than 40% since late July.
• Lam Research Corp. and KLA Corp., two of the largest US makers of semiconductor production machines, rank as the fourth- and sixth-best performing stocks in the Philadelphia Stock Exchange Semiconductor Index this year with gains exceeding 68%.

Why this matters: The surge reflects how AI spending by tech companies continues to drive demand throughout the semiconductor supply chain, creating investment opportunities in previously overlooked corners of the industry.

• Traditional chip stocks like Broadcom Inc. have already experienced significant runups, prompting investors to explore suppliers of manufacturing equipment as the next frontier.
• These equipment companies benefit from the increased production capacity needed to meet surging demand for AI chips.

The bigger picture: The rally in semiconductor equipment stocks demonstrates how the AI investment theme is expanding beyond the most obvious beneficiaries to encompass the entire ecosystem of companies supporting chip production and testing infrastructure.