Bernstein: Semiconductor Equipment Doesn't Follow Memory, History Has Proven It Twice
According to TechFlow Research, Bernstein's July 13 report pointed out that since June 2025, the memory sector has cumulatively outperformed semiconductor equipment by 661 percentage points. This has generated a common concern in the market: if memory corrects, will equipment follow suit and fall? Bernstein addressed this question using ten years of historical data. Equipment and memory are not highly correlated; correlation has remained low over the long term, and equipment has twice performed independently when memory weakened.
Both divergence periods lasted about two years, with equipment achieving significant relative outperformance. From 2019 to mid-2025, memory continuously underperformed equipment for up to six years, only catching up in February 2026 at a level of 36-fold cumulative gain over 15 years. Since then, memory has accelerated upwards, with excess returns accumulating to extreme levels.
If mean reversion occurs, equipment is expected to gain relative returns. SK Hynix has announced a $67 billion capacity expansion plan; equipment orders represent certain revenue. Bernstein rates Applied Materials AMAT, Lam Research LRCX, and ASML all as Outperform, with target prices of $525, $340, and €2300 respectively.
