Bernstein pushed back on the idea that memory makers and semiconductor equipment producers always move in tandem, telling clients in a note that equipment shares can outperform even when memory stocks are weakening.
Analyst David Dai highlighted that the long-term link between top memory companies and major wafer fabrication equipment (WFE) firms is modest. Over the 2012-2018 period the correlation between the two groups was 0.4, Dai noted. That relationship rose after 2019 but only to about 0.6, while WFE and the broader SOX index have shown a consistently higher correlation in the 0.8-0.9 range.
Dai emphasized two historical intervals in which divergence was particularly pronounced. From January 2015 through December 2016, WFE stocks climbed 21.9% while memory shares dropped 16.2% - a gap of 38.2 percentage points. A more recent span, January 2021 through December 2022, saw WFE increase 15.3% as memory fell 34%, producing a 49 percentage point divergence.
The note argues that investors need not assume memory and equipment will always rise or fall together. Bernstein suggests diversification between WFE and memory can be beneficial, pointing out that WFE growth is necessary to expand memory capacity - and that capacity additions are a source of memory price volatility.
On fundamentals, Bernstein favors WFE as a long position, citing accelerating memory capital expenditure. The firm singled out SK Hynix's recently announced KRW 100 trillion investment in new Cheongju fabs as an example of rising capex that supports equipment demand.
Bernstein also sees the potential for consensus upward revisions to WFE market forecasts and company earnings per share through 2028, according to the note.
Following the recent market pullback, Bernstein maintained positive stances on Samsung, SK Hynix and Micron. By contrast, it kept Kioxia at an Underperform rating, citing valuation concerns and long-term competitive threats from China.
Contextual note - The firm’s analysis is aimed at illustrating how sectoral correlations have evolved and where selective exposure might make sense, rather than asserting that all companies within either group will behave identically.