Lam Research was rising 4% to $595.46, while Applied Materials rose 5.23% to $133.39 on Wednesday.
Analyst Stacy Rasgon started Lam Research off with a $700 share price target and $160 price target for Applied Materials as part of a research report initiating coverage of the U.S. semiconductor capital equipment companies "with a positive long-term structural stance."
While semiconductors are difficult to forecast, Rasgon said, "semicap has historically tended to be at the end of the bullwhip, with the rapid expansion/deflation seen in past years in semiconductors magnified into wild cyclical swings in the equipment space."
"Over the last several years, the cyclical environment for semicap has become more supportive," the analyst said. "While still subject to swings, underlying semiconductor volatility has dampened as that industry has grown (and approached the $500B mark), with volatility correspondingly reduced in the semicap industry that feeds it."
Consolidation within the space "has helped to improve returns," he added.
"AMAT and LRCX have a number of similarities," Rasgon said. "Both play in a variety of sub-markets (as opposed to, say, KLA Corp. (KLAC) - Get Report or ASML (ASML) - Get Report who maintain much more focus in their specialties). Both have grown over the years through acquisitions."
Applied Materials is bigger and more diversified, the analyst said, and makes equipment for display manufacturing as well as semiconductors, "whereas Lam Research plays primarily in etch and deposition."
"The two companies overlap within deposition in the CVD (chemical vapor deposition) space, and in conductor etch," Rasgon said.