B. Riley previews Semi Cap Equipment sector ahead of Semicon West

B. Riley analysts issued a note on the semiconductor capital equipment sector, outlining expectations ahead of the SEMICON West industry conference, where the firm is sponsoring a CEO Summit on October 13.

The firm holds Buy ratings on several companies attending the event, including Axcelis Technologies (NASDAQ: ACLS) with a $198 price target, Cohu (NASDAQ: COHU) at $69, FormFactor (NASDAQ: FORM) at $165, and Ichor Holdings (NASDAQ: ICHR) at $105. Additional Buy-rated names with scheduled one-on-one meetings include Onto Innovation (NYSE: ONTO) at $390, Applied Materials (NASDAQ: AMAT) at $700, and Lam Research (NASDAQ: LRCX) at $350.

According to the note, B. Riley's prior research identified four positive tailwinds that have emerged since on-cycle earnings, which the firm estimates could contribute to approximately $200 billion and $230 billion in wafer fabrication equipment spending in 2027 and 2028, respectively.

The analysts noted that concerns around AI data center sentiment, political opposition, and U.S. interest rate conditions have raised potential recession risks. The note referenced a three-month decline of approximately 20% in the PHLX Semiconductor Index, which the firm characterized as pricing in regional recession risk, followed by a 600 basis point rally. The analysts added that downside risk remains if a global recession scenario requires pricing in a historical range of -25% to -45%.

The note also referenced the OCP Global event in Silicon Valley as a potential source of insights into networking and interconnect chip demand relevant to the semiconductor equipment sector.

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