Skip to main content

When it comes to semiconductor stocks, investors may be taking the hint that it's safe to look beyond the hazy visibility of this year.

"We've gone from looking over the edge of the cliff and wondering how far down the crevice the abyss is, to looking across," said

Robertson Stephens

analyst Sue Billat.

Semiconductor equipment stocks rose sharply a day after industry leader

Applied Materials

(AMAT) - Get Applied Materials Inc. Report

reported earnings that beat lowered estimates, but forecast a grim coming quarter and claimed the rest of the year was unknowable.

The immediate catalyst for today's rise may have been a series of upgrades of semiconductor equipment makers from

J.P. Morgan

analyst Eric Chen, who said recent declines produced good entry points into the stocks for investors. But there are other signs as well.

Chen upgraded Applied,





Scroll to Continue

TheStreet Recommends

(KLAC) - Get KLA Corporation Report


ASM Lithography

(ASML) - Get ASML Holding N.V. Report


Varian Semiconductor


. Other semiconductor equipment makers joined in the fun.

Despite a string of reduced estimates from analysts, Applied jumped $5.56, or 13.5%, to $46.81. Investors had been looking down on the stock recently; Applied has dropped 18% since the beginning of the month.

Novellus, down 19% for the month, closed up $5.19, or 13.4%, to $43.94. Teradyne was up 12%, as was Lam Research.

KLA-Tencor, which dropped 19% this month, closed higher, up $6, or 16.2%, to $43.13.

As for the other signs, here's one: The CEO of

Taiwan Semiconductor Manufacturing Corporation

(TSM) - Get Taiwan Semiconductor Manufacturing Company Ltd. Report

said last week that he expects the company's business to bottom in April.

And because TSMC is the world's leading semiconductor foundry and makes chips for 300 companies, its opinion is taken seriously. That trough points toward semiconductors getting healthier in the second half of the year.

Here's another clue: Two days ago,


(PLAB) - Get Photronics Inc. Report

reported better-than-expected earnings. Photronics, which makes the patterns used to etch the path of circuits on semiconductors, usually is a lagging indicator for semiconductors.

Photronics isn't used to January being an up quarter, but this was one. And the company is an indicator of the health of semiconductors. Not surprisingly, some investors took notice of a very positive report.