Chip-equipment and memory stocks have started outpacing Nvidia in 2026, with companies like Micron Technology, Applied Materials, Lam Research, and KLA posting gains that make the GPU king look almost boring by comparison. The PHLX Semiconductor Sector Index has climbed roughly 79% year-to-date through late June, a rally so broad it’s pulling up names that most retail investors couldn’t pick out of a lineup.
Micron lit the fuse
On June 24, Micron dropped a quarterly forecast so bullish it sent its shares up more than 12% in after-hours trading. The company disclosed $22 billion in committed customer spending, a figure that tells you memory demand isn’t just healthy, it’s practically insatiable.
The ripple effect was immediate. The session added over $400 billion in market value across the semiconductor sector, lifting chip-equipment makers and memory producers in near lockstep.
Lam Research and Applied Materials have recorded gains in the 20-30% range at various points this year. These are companies that build the machines that build the chips.
The picks-and-shovels thesis is finally working
Hyperscaler AI-related capital expenditures for 2026 have hit an estimated $750 billion. That number is projected to exceed $1 trillion the following year.
Qualcomm, traditionally known for mobile chips, has projected $15 billion in annual data-center revenue by 2029.
Applied Materials makes the deposition and etching tools essential for fabricating advanced chips. Lam Research specializes in the plasma etch systems that carve nanometer-scale patterns into silicon wafers. KLA provides the inspection and metrology equipment that ensures those patterns are actually correct.
What the rotation means for markets
There’s a valuation angle too. Nvidia’s price-to-earnings multiple, after years of relentless buying, sits at levels that demand perfection every quarter. Chip-equipment stocks, while not cheap, have historically traded at more modest multiples.
The risk, of course, is cyclicality. Semiconductor equipment is a notoriously boom-and-bust business. When hyperscalers eventually slow their spending, equipment orders are among the first line items to get trimmed.