Cheaper AI Chip Opportunities? Why Veeco and Axcelis Are Emerging as Two Underrated Semiconductor Equipment Stocks
Cheaper AI Chip Opportunities? Why Veeco and Axcelis Are Emerging as Two Underrated Semiconductor Equipment Stocks
The artificial-intelligence boom has already transformed the stock market, especially in semiconductors. While many investors first think about giant chip designers or the biggest equipment makers, another part of the industry is gaining attention: semiconductor capital equipment, often called “semicap.” According to a recent MarketWatch report, some of the most popular chip-equipment stocks have rallied sharply as investors look for businesses that can benefit from years of AI-related spending, not just one product cycle. In that same report, two smaller names stood out as potentially cheaper ways to invest in this hot trend: Veeco Instruments and Axcelis Technologies.
This matters because AI is not just about chatbots or software. Behind every powerful AI model is a huge physical buildout of infrastructure. Companies need more advanced memory, more sophisticated packaging, and more fabrication capacity to keep up with demand. That means the businesses supplying tools to make chips can ride the trend for a long time. MarketWatch reported that Mizuho trading-desk analyst Jordan Klein sees investors rotating into semiconductor equipment because these firms could benefit from elevated capital spending for years.
Why semiconductor equipment stocks are becoming a major AI investment theme
In the current AI cycle, many investors are looking beyond the obvious leaders and asking a simple question: who sells the picks and shovels? Semiconductor equipment companies fit that idea well. They do not always depend on the success of one single chip architecture or one chipmaker. Instead, they can benefit when the entire industry ramps up spending on new factories, advanced packaging, memory upgrades, and production tools. That is one reason semicap stocks have become so attractive in recent months.
MarketWatch noted that several larger names in the space have already enjoyed major gains over the last six months. Shares of Lam Research rose 64.7%, Applied Materials climbed 65.3%, and KLA advanced 35.6%. Some smaller but still well-followed companies did even better, with Teradyne up 118.5% and Advanced Energy Industries up 86.7% during the same period. Those moves suggest the market has aggressively priced in optimism around AI-driven chip spending.
That kind of rally can create a problem for new investors. A strong trend may still be real, but the easiest gains may already be behind the most crowded names. Once a stock becomes the obvious winner in a hot sector, its valuation often rises much faster than its business fundamentals. That does not always mean the stock is a bad investment, but it can mean the margin for error gets smaller. If growth slows even a little, expensive stocks can disappoint quickly.
That backdrop helps explain why attention is turning toward Veeco and Axcelis. These companies are tied to many of the same long-term industry trends, but their shares have not surged as dramatically as some of their peers. As a result, they may appeal to investors who still want semiconductor exposure tied to AI infrastructure without chasing the most expensive names in the sector. That is the heart of the argument outlined in the MarketWatch report.
Why Veeco Instruments and Axcelis Technologies look cheaper than their rivals
One of the clearest reasons these two stocks are getting attention is valuation. MarketWatch reported that, based on expected earnings over the next 12 months, Veeco traded at about 20.2 times forward earnings and Axcelis at roughly 25.6 times forward earnings. By comparison, Teradyne traded at 43.1 times, KLA at 32.3 times, Lam Research at 32 times, and Applied Materials at 27.8 times forward earnings.
Those numbers do not automatically make Veeco and Axcelis bargains, but they do suggest that investors are paying less for each dollar of expected profit compared with several better-known peers. In a market where enthusiasm around AI has pushed many related stocks higher, that lower multiple can stand out. It may signal skepticism, but it can also create opportunity if the market is underestimating future growth.
Performance over the previous six months also shows the gap. Veeco shares were up 18.1%, while Axcelis stock was down 0.1%. Those moves look muted next to the much stronger advances posted by larger equipment companies. Mizuho’s Jordan Klein said both stocks had “materially lagged” their bigger rivals, and that lag is exactly what makes them interesting now. Investors looking for a second wave of AI-related winners often search for stocks that have not already been fully re-rated by the market.
Still, lower valuations usually come with a reason. In this case, the market appears to be worried about business exposure to slower legacy chip markets and uncertainty linked to a pending merger between the two companies. MarketWatch said the Veeco-Axcelis deal is expected to close in the second half of 2026, but it is still waiting for approval from China’s State Administration for Market Regulation.
Veeco’s investment case: exposure to advanced packaging, HBM, and high-growth tools
Among the two companies, Veeco may be the more underappreciated AI story. Klein told MarketWatch that Veeco could be a “compelling” long-term play because of the kinds of tools it sells. The company offers technologies such as ion-beam deposition and laser annealing, both of which are used in semiconductor manufacturing and advanced chip packaging.
Why is that important? As AI chips become more advanced, the manufacturing process becomes more complicated. It is no longer just about producing more wafers. Companies also need better memory integration, stronger packaging methods, and improved process control. Veeco appears to have exposure to some of the most attractive parts of that value chain. MarketWatch cited Klein as saying the company has tool exposure to “some of the highest-growth end markets right now,” including hard-disk drives and high-bandwidth memory, or HBM, while its growth and bookings are accelerating.
Why HBM matters so much in the AI boom
HBM has become one of the most important technologies in the AI hardware market. Modern AI accelerators need massive amounts of memory bandwidth to move data quickly enough for training and inference tasks. Traditional memory solutions are often not sufficient for the most demanding workloads, which is why HBM has become critical in advanced AI systems. When the market talks about an AI chip shortage, memory packaging and supply are often part of that conversation.
MarketWatch pointed out that the world’s three biggest memory-chip makers — SK Hynix, Samsung Electronics, and Micron Technology — have benefited from supply shortages driven by AI demand. The report said these companies have also announced plans to expand manufacturing for DRAM and NAND, as they respond to a supply-demand imbalance expected to continue for at least the next few years.
That planned expansion has major implications for equipment suppliers. If more fabrication facilities are built, expanded, or retrofitted, chipmakers will need more manufacturing tools. Klein argued that this should create additional demand for semiconductor equipment over the coming years. He also noted that increasingly complex AI chip designs are adding demand for new tools related to inspection and packaging.
That helps explain why Veeco’s role may be bigger than many investors assume. It is not just a niche supplier sitting on the edge of the AI story. If its equipment is used in advanced memory and packaging workflows, then it could benefit directly from one of the most important hardware bottlenecks in the AI economy. In other words, Veeco may offer indirect but meaningful exposure to one of the fastest-growing parts of semiconductor demand.
Axcelis’s investment case: a DRAM and ion implantation angle on AI growth
Axcelis offers a different but still important way to play the same broad theme. The company designs and manufactures ion implantation equipment, which is critical for creating transistors on chips. That gives it a foundational role in semiconductor production. In the MarketWatch report, Axcelis Chief Executive Russell Low highlighted the company’s opportunity in DRAM, saying momentum should continue through 2026 as customers expand capacity to address growing demand for AI-related applications.
That comment is important because DRAM demand is increasingly tied to AI servers, data centers, and memory-heavy computing tasks. As AI models grow larger and more capable, they need faster and denser memory systems. That creates a ripple effect across the semiconductor ecosystem. Equipment companies that support DRAM manufacturing could benefit as memory producers invest to keep pace.
The challenge in Axcelis’s story
Axcelis’s opportunity is real, but it is not without limits. MarketWatch cited William Blair analyst Jed Dorsheimer, who wrote that Axcelis holds the second-largest share of the memory ion implantation market behind Applied Materials. According to that analysis, Axcelis has less dominance in memory than it does in some of its other end markets, which can lead to lower margins and lower average selling prices.
That is a key nuance for investors. A company can have exposure to a high-growth theme and still face intense competition. In Axcelis’s case, being positioned in DRAM is positive, but competing against a larger incumbent in a strategic market can limit near-term profitability. Even so, exposure matters. If DRAM spending rises meaningfully because of AI, Axcelis may still have room to grow, especially if overall demand expands enough to benefit multiple suppliers.
And that brings the discussion back to valuation. Because the company’s stock has not surged like some peers, investors may be paying a more reasonable price for that potential. For those who believe AI-related memory spending will remain strong for several years, Axcelis could look attractive as a lower-profile way to participate.
The pending Veeco-Axcelis merger could reshape the long-term story
One of the most interesting aspects of this situation is that Veeco and Axcelis are not just being discussed as separate opportunities. They are also in the process of combining. MarketWatch reported that the pending merger is still awaiting approval from China’s State Administration for Market Regulation. Jordan Klein said investor caution around that pending deal may be one reason the stocks have lagged.
Whenever a cross-border regulatory review is involved, uncertainty can weigh on sentiment. Investors dislike deals that could be delayed, altered, or blocked. That uncertainty can hold back a stock even when the core business looks promising. So, in this case, part of the discount may reflect merger risk rather than a weak long-term industry outlook.
At the same time, some analysts see strategic benefits in the combination. According to MarketWatch, William Blair’s Dorsheimer said the merger would complement Axcelis’s singular focus on ion implant and help the combined company cast a wider net across semiconductor capital equipment.
That broader product scope could matter a great deal. In semiconductor equipment, diversification can help smooth demand cycles and deepen customer relationships. A broader platform may allow the combined company to serve more production steps, pursue more end markets, and become more relevant in large chip-fabrication spending programs. While integration always carries risk, the strategic logic is easy to understand: together, the companies may be able to compete more effectively than they could alone.
Why the market is still cautious despite the AI tailwind
If the long-term AI opportunity is so strong, why have Veeco and Axcelis lagged? MarketWatch highlighted two main issues. First, both companies have more exposure to certain slower end markets, including legacy node and silicon-carbide chips, where demand has been weakening. Second, the pending merger has added a layer of uncertainty.
Those concerns are worth taking seriously. AI may be booming, but not every part of the semiconductor market is moving at the same speed. Legacy processes can face softer demand, especially if broader industrial or automotive orders cool. Silicon-carbide markets can also be more cyclical than the market’s hottest AI narratives suggest. That means these stocks are not pure AI plays in the way a market leader in GPU hardware might be. They are broader chip-equipment names with partial exposure to the AI buildout.
Yet that mixed exposure can also be why they trade at less aggressive valuations. In the market, pure stories often command the highest multiples. More complicated stories, where a company has both strong and weak end markets, usually get discounted. For patient investors, that complexity can be attractive. If the AI-related businesses strengthen faster than the weaker segments deteriorate, the market may eventually re-rate the stock upward.
What this means for investors watching the next phase of the AI infrastructure boom
The bigger message from this report is not simply that Veeco and Axcelis are “cheap.” It is that the AI investment theme is spreading deeper into the semiconductor supply chain. Early in the cycle, many investors focused on the most obvious winners: advanced AI chip designers and the largest equipment companies. Now the conversation is widening to include smaller, more specialized firms whose tools support memory expansion, packaging complexity, and fabrication upgrades.
That shift makes sense. AI infrastructure is a multiyear buildout, not a one-quarter event. New fabs, upgraded production lines, advanced memory capacity, and more complex packaging systems all require equipment. If those spending plans continue, then a broader set of suppliers may benefit. Jordan Klein specifically described chip-equipment stocks as a multiyear growth opportunity rather than a “one-and-done setup.”
For investors, that means stock selection becomes more nuanced. Buying only the most famous names may still work, but it often comes with higher expectations and richer valuations. Looking at laggards with credible AI exposure may offer a different kind of opportunity. Veeco and Axcelis fit that profile because they participate in parts of the industry that could become increasingly valuable as AI hardware grows more advanced.
Final take: undervalued semiconductor names worth watching
Veeco Instruments and Axcelis Technologies are not the flashiest names in the AI market, and that may be exactly why they are drawing attention. Their stocks have trailed many semiconductor-equipment peers even as the AI spending theme has lifted the broader sector. MarketWatch’s reporting suggests that lag, combined with lower forward earnings multiples, is making them stand out as potentially more affordable AI-related investments.
Veeco’s appeal rests on its exposure to advanced manufacturing tools tied to high-bandwidth memory and packaging, two areas that are becoming more important as AI chips grow more complex. Axcelis offers an ion implantation and DRAM angle, giving investors a way to tap into memory-related AI expansion through a company whose valuation remains less stretched than some better-known peers. Both also have an additional strategic catalyst in their pending merger, even though that same deal currently adds uncertainty.
Of course, these stocks are not risk-free. Demand softness in some legacy markets, competitive pressures, and regulatory delays tied to the merger could all affect the outlook. But for investors who believe the AI infrastructure buildout still has years to run, the case for looking beyond the most crowded trades is getting stronger. In that context, Veeco and Axcelis may be two semiconductor equipment stocks worth watching very closely in 2026.
Source reference: This rewritten article is based on reporting published by MarketWatch on March 28, 2026, about Veeco Instruments and Axcelis Technologies as potentially cheaper ways to invest in the AI semiconductor equipment trend.
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