Chip shortages lead companies to buy more equipment to boost production, says Jim Cramer
Speakers
Jim Cramer
— Host, Mad Money
Summary
Jim Cramer argues investors should not chase the memory and data-storage stocks—Micron, Western Digital, Seagate, and SanDisk—after their massive run, because commodity chip makers could be derailed by capacity expansions or hyperscaler pullbacks. Instead, he favors semiconductor capital equipment makers, including ASML, Applied Materials, KLA, and Lam Research, as a relatively safer and more durable way to play the chip shortage. He cites TSMC's large capex plan, Micron's new fabs, and Intel's equipment shortage as evidence of multiyear equipment demand. Cramer calls Lam Research his favorite in the group and says he would buy on a selloff.
- Cramer warns against chasing memory and data-storage stocks after huge gains.
- He prefers semiconductor capital equipment as a safer chip-shortage play.
- TSMC's capex guidance and supply-demand outlook support equipment demand.
- Micron's New York, Idaho, and Singapore fabs imply multiyear equipment orders.
- Intel's guidance issue stems from insufficient manufacturing equipment.
- Cramer names ASML, Applied Materials, KLA, and Lam Research; Lam is his favorite.
- He would buy semiconductor capital equipment stocks on a pullback.
- Upcoming earnings for ASML, Lam, and KLA are high-bar events.
Ideas
Memory stocks too late to chase
Cramer refuses to chase the memory and data-storage stocks—Micron, Western Digital, Seagate, and SanDisk—after they tripled or more last year and extended gains in 2026. Even though there is a severe shortage thanks to data-center demand, these are commodity chip makers that can be derailed by small disruptions: Korean competitors Samsung and SK Hynix could expand capacity without warning, or hyperscalers could dial back data-center investment because of sky-high memory prices. Given how much they have run, he thinks investors who do not already own them are too late.
Equipment makers are safer chip-shortage play
Cramer argues that chip shortages and the data-center/AI buildout are forcing chipmakers to buy more manufacturing equipment, making semiconductor capital equipment a relatively safer way to play the memory and data-storage boom than chasing commodity memory stocks. TSMC's $52-$56 billion capex plan, its view that supply and demand will not balance until 2028-2029, Micron's new fabs in New York, Idaho, and Singapore, and Intel's lack of manufacturing equipment all imply multiyear equipment orders. The capital equipment names have run, but less than memory and storage, so they have relatively more room and are more durable winners; Wall Street may underestimate the long-term capacity expansion across the semiconductor ecosystem.
