Chip-Equipment Cycle Confounds

Analyst Tim Arcuri of Smith Barney Citigroup cited improved business models, a more responsive equipment industry and increasing factory utilization as reasons why tool orders will soon be increasing.

But the bears saw no imminent upturn in orders, as major memory manufacturers continue to hold off on expansions. This, in turn, should result in reduced industry estimates for 2006, which would then drive down stocks.

Analyst Mark FitzGerald of Banc of America Securities says the bubble mentality is still pervasive in this industry, despite growth rates that are closer to the broad economy. "We are still bearish on the idea that these are high-growth stocks and that you can slap a high multiple on them," he says.

The truth in investing is that nobody can really spot a bottom or top until it has passed. It's true for the broad market and it's especially true for the semiconductor-equipment industry. If it wasn't, everyone would make money.

So, where does this leave investors faced with a mix of opinions from the "experts"? In this sector, they're where they've always been -- on their own.