To The Moon

Yesterday, the $NASDAQ(.IXIC)$ fell 0.8%, while semiconductor stocks rose against the trend. $Taiwan Semiconductor Manufacturing(TSM)$ gained 1.42%; semiconductor equipment stocks saw $Applied Materials(AMAT)$ rise 3.37%, $Kirkland Lake Gold(KLA.AU)$ rise 3.62%, $Lam Research(LRCX)$ rise 2.37%, and $ASML Holding NV(ASML)$ rise 2.18%.

Looking back to the period since the outbreak of the Middle East conflict, the Nasdaq has been more volatile, down about 4%. In comparison, semiconductor manufacturing equipment stocks have rebounded faster. Applied Materials, KLA, Lam Research, and $Advanced Micro Devices(AMD)$ have largely recovered their previous declines in recent days, clearly outperforming the Nasdaq.

This divergence began to emerge after mid-March.

NVIDIA reported earnings on February 25, with quarterly revenue of $68.1 billion versus market expectations of $61.0 billion. Data center revenue reached $62.3 billion, also significantly above expectations. Guidance was revised upward, indicating that AI computing demand continues to rise.

Micron then reported earnings on March 18, with revenue of $23.86 billion compared to expectations of $19.0 billion, far exceeding estimates. EPS came in at 12.20 versus 8.50 expected, also well above expectations. The company also issued revenue guidance of $33.5 billion, further raising market expectations.

These two earnings reports make one thing clear—demand is not only present, but accelerating.

What is really driving capital into equipment stocks is the subsequent capital spending.

Micron has raised its fiscal 2026 capital expenditure to over $25 billion and indicated it will continue increasing, focusing on HBM and advanced memory capacity. Currently, HBM is operating at full capacity, while demand continues to rise.

TSMC, on the other hand, is projected to have capital expenditures in the range of $52 billion to $56 billion for 2026, with the majority allocated to advanced nodes and advanced packaging, essentially centered on AI-driven capacity expansion.

Once the industry enters an expansion phase, capital allocation becomes more straightforward. Chip companies are more affected by pricing and cycles, while equipment companies benefit directly from capacity expansion, with stronger earnings visibility.

Combined with the impact of the Middle East conflict, rising oil prices have brought inflation and interest rate pressures, affecting broad tech indices like the Nasdaq more significantly. Equipment stocks are less impacted, as their orders depend more on long-term capacity planning rather than short-term demand fluctuations.

As a result, the recent market pattern is clear: the Nasdaq is volatile, semiconductors show mixed movement, while equipment stocks remain relatively more stable.

If geopolitical tensions continue to ease and risk appetite recovers, the broader tech sector will benefit. However, in terms of timing, semiconductor equipment is recovering faster and more steadily.

Within $VanEck Semiconductor ETF(SMH)$ , AI equipment companies including ASML, KLA, Lam Research, and Applied Materials account for 19.92% of holdings, the highest among these ETFs. The ETF rose 0.83% on the day, with total assets of $43.793 billion and an expense ratio of 0.35%, making it the largest among high equipment-weighted products.

$iShares Semiconductor ETF(SOXX)$ has a similar allocation to AI equipment companies, with a weight of 18.26%. It rose 1.32% on the day, with total assets of $21.191 billion and an expense ratio of 0.34%, also offering strong liquidity.

In $Invesco PHLX Semiconductor ETF(SOXQ)$ , AI equipment companies account for 16.42% of holdings. The ETF rose 1.36% on the day, with total assets of $0.996 billion and an expense ratio of just 0.19%, the lowest among semiconductor ETFs, offering clear cost advantages for long-term holding.

In $INVESCO SEMICONDUCTORS ETF(PSI)$ , AI equipment companies including Applied Materials, KLA, and Lam Research account for 15.20% of holdings. The ETF rose 3.32% on the day, with total assets of $1.328 billion and an expense ratio of 0.50%, higher than the previous ETFs but with greater upside potential.

In $First Trust Nasdaq Semiconductor ETF(FTXL)$ , AI equipment companies account for 12.34% of holdings. The ETF rose 1.73% on the day, with total assets of $1.546 billion and an expense ratio of 0.60%.

Leveraged products $Direxion Daily Semiconductors Bull 3x Shares(SOXL)$ and $ProShares Ultra Semiconductors(USD)$ have AI equipment exposure of 3.66% and 1.45%, respectively. SOXL rose 3.64% on the day, with total assets of $12.347 billion and an expense ratio of 0.75%, as a 3x leveraged product with amplified volatility. USD has total assets of $1.579 billion and an expense ratio of 0.75%, as a 2x leveraged product with similar fee levels to SOXL.