Investors Flock to AI Chip Supply Chain Stocks Amid Surging Demand

Semiconductor equipment makers are riding a wave of investor enthusiasm as capital floods into the AI infrastructure supply chain. Teradyne Inc., provider of chip testing systems, has seen shares double since April with a 40% surge since late July. Peers Lam Research Corp. and KLA Corp. outperformed 90% of the Philadelphia Semiconductor Index constituents with 68% year-to-date gains.

The sector's momentum became undeniable earlier this month when Lam Research strung together a record 14-session winning streak, while Applied Materials Inc. followed with an eight-day rally. This frenzy reflects a market consensus that cloud providers and chip manufacturers will maintain heavy capital expenditures - though some warn the trade has become crowded.

"Valuations already price in perfection," noted Haris Khurshid of Karobaar Capital. "Any slowdown in orders could trigger rapid downside." The buying spree comes as tech behemoths like Microsoft and Alphabet pour billions into AI development, making equipment suppliers the last relatively undervalued segment in the semiconductor ecosystem.