3 Semiconductor Stocks for the AI Pullback

AI and semiconductor stocks are back in the spotlight as margin calls, leveraged trading and a sharp pullback in chip stocks test investors’ conviction. Volatile sessions, questions around hyperscaler spending after a Chinese AI model release, and weaker demand for AI sector debt are all pressuring sentiment at the same time. For long term investors, that mix can either present an opportunity to build positions on more reasonable terms or a reason to stay cautious. This article walks through 3 large, financially solid semiconductor stocks exposed to these headlines and explains how each could be affected by the current reset in expectations.

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Applied Materials (AMAT)

Overview: Applied Materials supplies the specialised equipment, software and services that chipmakers use to build and package semiconductors, from etching and depositing materials on wafers to inspecting and maintaining tools in fabs worldwide.

Operations: Applied Materials generates most of its US$29.0b revenue from Semiconductor Systems at US$20.9b, with Applied Global Services contributing US$6.8b, and key sales coming from Taiwan, China and Korea.

Market Cap: US$420.5b

Investors watching the AI pullback may find Applied Materials interesting because it sits at the heart of the tools that power advanced chips, yet still shows high profitability with net margins around 29.3% and strong returns on equity. Analysts expect solid earnings and revenue growth, backed by demand for AI infrastructure, advanced packaging and memory equipment, while a growing services business adds steadier, recurring income. At the same time, heavy exposure to a few major customers and regions, insider selling and reliance on external borrowing keep the risk dial turned up. With sentiment swinging alongside AI headlines and margin-call driven volatility, the key question is whether current expectations already bake in too much of the AI wave or still leave room for upside.

Applied Materials’ AI exposure, strong margins and recurring services revenue tell only part of the story. The real question is what the 4 key rewards and 1 important warning sign reveals about a potential twist in this setup.

HANMI Semiconductor (KOSE:A042700)

Overview: HANMI Semiconductor is a South Korean equipment maker that supplies the machines used to assemble, package and mark chips, including bonders, micro SAW tools, laser systems and vision placement gear used by semiconductor manufacturers worldwide.

Operations: HANMI Semiconductor generates essentially all of its ₩480.2b revenue from semiconductor equipment, with most sales coming from Asia and smaller contributions from Europe, North America and South America.

Market Cap: ₩23.0t

HANMI Semiconductor is closely tied to Samsung Electronics and other Asian chipmakers. The recent AI and memory pullback in Korea has hit sentiment, while analysts currently highlight high margins and a 28% return on equity. The stock trades on a very rich P/E multiple and has shown sharp price swings, while recent quarterly earnings fell from the prior year. These factors raise the bar for future execution. For investors screening AI and semiconductor equipment stocks, the tension between aggressive expectations, funding that leans on external borrowing and the company’s role in advanced packaging and AI hardware makes HANMI Semiconductor a higher risk story that some market participants may consider for closer attention.

HANMI Semiconductor’s rich P/E and sharp swings suggest investors may be missing a crucial piece in the story, and the 2 key rewards and 1 important major warning sign could show whether optimism is quietly colliding with a hidden pressure point

SCREEN Holdings (TSE:7735)

Overview: SCREEN Holdings is a Kyoto based equipment maker that supplies wafer cleaning, lithography, inspection and other semiconductor production tools used by chip fabs worldwide. It also sells display, printed circuit board and graphic arts equipment plus various printing and AI driven software solutions.

Operations: SCREEN Holdings generates most of its ¥605.7b revenue from the Semiconductor Production Equipment Business at ¥486.0b. It also reports smaller contributions from Graphic Arts Equipment at ¥57.5b, Display Production Equipment and Coater at ¥44.8b, Printed Circuit Board Related Equipment at ¥14.5b and other lines.

Market Cap: ¥3.1t

SCREEN Holdings participates in the AI buildout by supplying tools for leading edge foundries and memory makers at a time when chipmakers are reporting strong inquiry for AI servers and high bandwidth memory, even as margin calls and leveraged selling affect AI related stocks. The company has reported earnings and revenue growth that has outpaced the broader Japanese market. Analyst commentary points to expectations for profit growth and a high return on equity, yet the stock has recently lagged both the domestic semiconductor sector and the index while trading on a premium P/E. Heavy exposure to China, rising competition, dividend reductions and earnings variability add complexity to the investment case, which is why the detailed risk and reward picture may be important for investors watching the current AI related correction.

SCREEN Holdings looks like an AI equipment heavyweight whose premium P/E and recent underperformance may be masking a sharper story, and the 1 key reward and 1 important major warning sign could reveal where expectations and risk are quietly pulling apart.

The three stocks covered here are just a starting point, as the full AI and Semiconductor Stocks screener highlights 34 more companies with equally compelling AI and semiconductor stories that could reshape how you think about this theme. Use Simply Wall St to identify and analyze the specific catalysts, financial traits and narratives that matter most to you, so you can focus on the highest conviction ideas in this space.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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