These chip stocks on Josh Brown's list have been home runs, and can continue rising

KLA Corp (KLAC) and Lam Research (LRCX) remain strong leadership names in semis, both trading near new highs after extended multi-month consolidations. KLAC is up 42% YTD and trades at 36x forward earnings with 32% expected EPS growth, while LRCX is up 51% YTD after rising 139% in 2025 and is back near $263. The article highlights constructive technical setups, with KLAC support around $1,500/$1,194 and LRCX support around $225-$230/$200.

Analysis

The key signal here is not simply that two high-quality semi names are making new highs, but that the market is rewarding capital intensity when it is paired with visible earnings durability. That matters for the broader equipment complex: if buyers are willing to pay up for KLAC and LRCX at elevated multiples, it implies the market is distinguishing between cyclical exposure and genuine process-control / wafer-fab share gains. Second-order, that typically pulls the bar higher for peers and suppliers that can show backlog visibility, while leaving lower-quality semi-cap names vulnerable to multiple compression if they cannot match the same growth-to-capex profile.

The risk is that these names are now in the “good news must keep arriving” zone. Over the next 1-3 months, the main failure mode is not macro weakness alone, but any sign that order growth is merely normalization rather than reacceleration; in that case, momentum funds can rotate quickly and the break of rising 50-day support would invite a sharper de-grossing. Over a 6-12 month horizon, the bigger hazard is that elevated expectations make even solid results look inadequate, especially if guidance implies the current outperformance is front-loaded rather than self-sustaining.

The contrarian miss is likely that investors are still underestimating how much pricing power and mix can offset a more moderate unit environment. These stocks do not need explosive end-demand to work; they need the market to believe the bottleneck in chip manufacturing remains on the equipment/process side, which supports premium multiples longer than traditional cyclical valuation models assume. In that sense, the move may be less a pure momentum trade and more a re-rating of semi equipment as an infrastructure layer for AI-era capex.

For portfolio construction, the cleaner trade is to own the leaders and fade the laggards rather than short the group outright. The best short would likely be a pair against a higher-beta semi equipment name that lacks the same recurring service mix and margin stability, because the relative trade should persist even if the sector cools. On a time horizon of weeks, dips toward the rising 50-day should be bought; on a horizon of months, the trade only breaks if the pattern of higher lows gives way and the market starts rejecting high-multiple semi capex stories as a whole.

Key Decisions for Investors

• Long KLAC on any pullback toward the 50-day; trade it as a 4-8 week momentum continuation with risk defined below the recent higher-low structure, targeting a retest/clearing of prior highs.
• Long LRCX vs. short a weaker semi-cap equipment peer basket for 1-3 months; use it as a relative-strength pair to isolate leadership quality while reducing tape risk.
• Buy KLAC or LRCX call spreads 6-10 weeks out if the names hold above breakout levels for 2-3 sessions; structure for defined risk because the upside is continuation, not explosive optionality.
• Reduce/hedge any existing semicap beta if KLAC or LRCX lose rising 50-day support on volume; that would be the first signal that leadership is rotating out of the group.
• Add exposure to the equipment ecosystem only on confirmation, not anticipation; if these leaders keep working, it likely supports a broader re-rating in semiconductor capex beneficiaries over the next quarter.