SerpApi.Org
Three of the most important stocks in the artificial intelligence trade all set record highs on the same day, June 30. Three weeks later, they are down as much as 28%.
Bank of America thinks that drop is the reason to buy them.
The bank told clients on Wednesday that the pullback in Applied Materials Inc. AMAT, Lam Research Corp. LRCX and KLA Corp. KLAC is an entry point rather than a warning, because the machines these three companies sell are heading into their biggest spending wave in decades.
Bank of America analyst Vivek Arya expects wafer fab equipment spending, the total the industry lays out on those machines each year, to climb from roughly $144 billion in 2026 to about $250 billion by 2028.
That is growth of close to 30% a year, with the bank arguing that rising equipment prices could add another 10% on top.
So Why Did These Stocks Fall so Hard?
The three trade almost in lockstep with memory-chip makers, and investors got spooked by two fears at once: that memory prices were about to peak, and that cheaper Chinese AI models would let data centers spend less on hardware.
All three peaked on June 30.
In the three weeks since, Applied Materials has fallen about 23%, Lam Research about 27% and KLA about 28%.
But the order books were moving the other way.
Bank of America called the selloff “an enhanced buying opportunity,” pointing to more than two years of forward visibility, a wave of new chip factories coming online, and demand drivers like high-bandwidth memory, the stacked memory chips that feed AI accelerators, and gate-all-around transistors, the next design shift in leading-edge chips.
Here is how the bank frames each of its three picks, alongside where Wall Street stands today.
Applied Materials: The Broadest Bet On The Cycle
Applied Materials is the largest and most diversified name in the group, which gives it exposure to nearly every corner of the upcycle.
BofA’s Arya flags its leading share of about 20% in DRAM equipment, the memory now becoming the industry’s main bottleneck as AI demand strains supply.
Yet the stock trades at roughly 28 times next year’s earnings, close to its widest discount to peers in five years.
Bank of America rates it Buy with a $720 price target, about 29% above the current $556.24.
According to Benzinga Analyst Ratings, the consensus on Applied Materials is a Buy, with an average price target of $631.56. That implies roughly 14% upside from the current price, with the Street-high target sitting at $900.
Applied Materials — Recent Analyst Actions
Lam Research: The Etch And Deposition Leader
Lam Research is the through-cycle share gainer in etch and deposition, the steps that carve and layer the microscopic structures inside a chip.
Arya said it is best positioned for a coming wave of new NAND flash-memory capacity. Bank of America keeps a Buy and a $480 target, about 51% above $317.06.
The Street’s average target on Lam Research sits at $329.19 per Benzinga Analyst Ratings, also a consensus Buy, though that blended figure lags recent calls that reach a $500 Street-high. Evercore ISI issued the latest update, lifting its target to $355.
KLA: The Compounder Bank Of America Says Is Too Cautious
KLA leads in process control, the inspection and measurement tools that catch defects before they ruin a wafer.
Arya called it a “compounder at cusp of acceleration” and said its high-teens full-year sales guidance looks conservative. Bank of America rates it Buy with a $317 target, about 46% above $217.16.
Analyst consensus on KLA is a Buy per Benzinga Analyst Ratings. The most recent targets run from a trimmed $240 at UBS to a $325 Street-high at Cantor Fitzgerald.
UBS issued the latest call, cutting to $240, still about 11% above the price.
Source: Benzinga Analyst Ratings
The three stocks fell because the market decided the AI capital-spending wave was cooling.
Bank of America’s case is that it is doing the opposite.
Photo: Shutterstock
© 2026 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
This article 3 Semiconductor Stocks to Buy After the Selloff — Bank of America’s Picks originally appeared on Benzinga.com.
