Better Semiconductor Equipment Stock: Applied Materials vs. Lam Research
2026-09-29 18:30
•Harsh Chauhan •The Motley Fool
••••• •• Axe Cap view
Applied Materials vs. Lam Research: Which Semiconductor Play to Back?
Both giants in chipmaking equipment boast solid growth, but one edges ahead for local investors.
Applied Materials and Lam Research have both benefited massively from the AI chip boom, driving wafer fabrication and advanced packaging demand. Their growth numbers are eye-catching—revenue forecasts around 50% and earnings up to 85%. But when you weigh the nuances, Applied Materials stands out. It not only boasts a slightly higher EPS growth outlook but is already locking in deals for fab capacity extending to 2030. For South African investors, the direct link to JSE stocks isn’t obvious, but remember that semiconductor demand heavily influences USD/ZAR. Strong US tech hardware demand tends to support the dollar, which keeps the rand under pressure. That’s a double-edged sword for local importers but a tailwind for exporters like AngloGold Ashanti or Sasol who benefit from a weaker rand. If you lean into high-growth tech abroad, keep an eye on USD/ZAR moves alongside these US semiconductor bellwethers. Of course, forecasts can falter if AI hype cools or chip supply chains normalize faster than expected, capping growth. this is just our opinion and not financial advice
Buy Applied Materials for a more assured run on AI-driven equipment demand. Watch USD/ZAR swings closely—if the rand strengthens sharply, it might be prudent to trim international tech exposure. Lam Research can be watched for a later entry on any pullbacks.
- AMAT
- LRCX
- USD/ZAR
- AI demand slows faster than expected
- USD/ZAR volatility impacts local returns
6/10
Applied Materials and Lam Research, both semiconductor equipment manufacturers, have experienced significant growth driven by AI chip demand. Despite recent pullbacks of 27-33% from 52-week highs, both companies show strong fundamentals with expected revenue growth of 51-52% and EPS growth of 71-85% in upcoming quarters. With nearly identical valuations and growth prospects, both stocks present attractive buying opportunities as semiconductor equipment spending is projected to reach $229.5 billion by 2028.
Our take is based on reporting first published by The Motley Fool.