Investing.com — Bernstein told clients in a note Monday that semiconductor equipment stocks can outperform even when memory shares are falling, pushing back against investor concerns that the two sectors move in lockstep.
Analyst David Dai said the “historical correlation of memory and SPE share prices is not high,” noting that during 2012-2018, the correlation between the top memory companies and the top five wafer fabrication equipment firms was only 0.4.
Since 2019, the correlation has increased, but only to 0.6, while SPE and the broader index have maintained a consistently higher correlation of 0.8-0.9.
Bernstein pointed to two periods where the divergence was particularly stark. From January 2015 to December 2016, WFE was up 21.9% while memory was down 16.2%, a 38.2 percentage point gap. From January 2021 to December 2022, WFE rose 15.3% while memory fell 34%, a 49 percentage point divergence.
Dai said investors “can still benefit from diversification between WFE and memory, rather than worrying that both must go up and down together,” particularly given that WFE growth is required to add memory capacity, which is itself the cause of memory price volatility.
On fundamentals, Bernstein likes WFE as a long, citing accelerating memory capital expenditure, including ’s recently announced KRW 100 trillion investment in new Cheongju fabs.
The firm sees “consensus upward revision potential for WFE market and company EPS through 2028.”
Bernstein maintained positive views on , SK Hynix and after the recent pullback, while rating at Underperform on valuation and long-term competitive threats from China.