Semiconductor Equipment Makers Capture AI Chip Demand

Applied Materials, Lam Research, and Cohu have posted strong quarterly results, highlighting the critical role of semiconductor equipment in the AI chip supply chain. While investors often focus on chipmakers like Nvidia and Samsung, these equipment providers are seeing accelerated revenue growth and margin expansion due to rising demand for advanced fabrication and testing tools.

According to market data from GN stocks/chips, these companies are benefiting from a structural shift where AI complexity drives more frequent equipment turnover. Applied Materials reported a 25% year-over-year sales surge in its fiscal 2026 third quarter, while Lam Research saw a 15% sequential revenue increase, driven by the need for advanced wafer fabrication tools.

Applied Materials Sustains Pricing Power

Applied Materials expanded its gross margins for the 13th consecutive quarter, demonstrating significant pricing power in a competitive market. The company’s revenue growth was supported by long-term R&D partnerships with major chipmakers, including Samsung, which has locked in 70% of its memory chip supply through 2031. This relationship ensures a steady demand for Applied Materials’ equipment, as Samsung requires specialized tools to manufacture its high-volume memory chips.

Management expects continued strong growth, targeting $10.25 billion in revenue for the fiscal 2026 fourth quarter. This figure represents a sequential increase of more than 12%, reflecting the company’s ability to capitalize on AI tailwinds and its position as a key supplier of materials engineering solutions for next-generation chip production.

Lam Research Benefits From Equipment Turnover

Lam Research has outperformed major chipmakers this year, with shares surging more than 70% as its advanced wafer fabrication equipment becomes essential for AI chip production. Unlike consumer electronics, where product lifecycles are long, the rapid advancement of AI chips necessitates more frequent upgrades to fabrication tools. This dynamic increases the turnover rate for Lam Research’s equipment, directly translating into higher product sales and revenue growth.

The company’s recent financial results show a 15% sequential revenue increase, driven by robust demand for AI-specific tools. Looking ahead, Lam Research projects third-quarter revenue of $8.1 billion at the midpoint, implying a 21% sequential growth rate. This trajectory underscores the company’s strong market position and its ability to capture value from the expanding AI infrastructure build-out.

Cohu Narrows Losses Amid Growth

Cohu, a smaller player with a market cap of approximately $2.5 billion, is experiencing rapid growth in its chip testing equipment segment. The company reported 38% year-over-year revenue growth in the second quarter, driven by increased demand from chipmakers and hyperscalers who require rigorous testing to ensure AI chip reliability before customer delivery.

Cohu has significantly improved its financial performance, narrowing its net loss from $16.9 million in Q2 2025 to just $0.2 million in the most recent quarter. The company has raised its annual AI-driven compute opportunity pipeline to about $850 million, with third-quarter sales forecast to reach $170 million at the midpoint. This 12% sequential gain reflects strong demand and suggests a clear path toward profitability as the company scales its operations.