One industry that has absolutely torn it up over the past year has been semiconductors. In fact, the PHLX Semiconductor Index (SOX) is up 12.3% so far this year, and a stunning 60% over the past year. One group of stocks that also has benefited from the huge chip growth is the semiconductor capital equipment companies, which make the gear that makes the chips.

In a new research report, JPMorgan remains Overweight the semi-cap equipment group and is reasonably bullish on the landscape for the top companies to Buy going forward. The firm noted this in the report:

While we continue to expect quarter-to-quarter variance in capital spending owing to a more concentrated semiconductor manufacturing customer base, when observing spending patterns over years, data suggests since coming out of the 2008/2009 downturn, capital spending has been more stable than any other time over the past 30 years.

Four top semiconductor capital equipment companies are rated Overweight at JPMorgan.

Applied Materials

Some on Wall Street feel this semiconductor capital equipment leader has the broadest range of exposure to 3D NAND and foundry display. Applied Materials Inc. (NASDAQ: AMAT) is the global leader in precision materials engineering solutions for the semiconductor, flat panel display and solar photovoltaic industries. Applied Material’s technologies help make innovations like smartphones, flat screen TVs and solar panels more affordable and accessible to consumers and businesses around the world.

The analysts are very positive on the stock and see Applied Materials benefiting not only the semiconductor side of the business, but also from larger, higher resolution and flexible screens on the display side of the business. The stock may still be one of the best technology values available for investors today. Some Wall Street analysts see continued FinFET capacity expansion (10nm/14nm/16nm) and transition to 3D NAND, with DRAM spending remaining strong this year.

Semiconductor and Display markets are strong. Many feel there are five top reasons to own the shares: semiconductor capital equipment strength, OLED, investments from China, valuation, and $4 in earnings per share in two years.

Applied Materials investors receive a 0.95% dividend. The JPMorgan price target for the stock is $42. The Wall Street consensus target is $41.16. Shares closed Tuesday at $42.04.

Lam Research

This remains one of the top chip equipment picks across Wall Street. Lam Research Corp. (NASDAQ: LRCX) designs, manufactures, markets, refurbishes and services semiconductor processing equipment used in the fabrication of integrated circuits. The company offers plasma etch products that remove materials from the wafer to create the features and patterns of a device.

Many Wall Street analysts have highlighted the company and its peers as having a significant equipment opportunity from the NAND evolution as well. Lam Research also appears well positioned to gain share in the wafer fab equipment market, driven by a strong focus on technology inflection spending over the next few years.

Despite so-so foundry and logic spending over the past year, many on Wall Street think that Lam will also continue to benefit from technology transitions such as FinFET, 3D NAND, multi patterning and advanced packaging in 2016 and beyond. Many analysts believe it is the “cleanest” semi-cap story benefiting from cyclical tailwind, SAM expansion and share gains.

Lam Research reported solid results and an impressive shipment outlook. The posted third-quarter fiscal 2017 non-GAAP earnings blew past the consensus estimate. Earnings were up 16% sequentially and 130.9% year over year.

Shareholders receive a 1.2% dividend. JPMorgan has a $155 price target, which compares with a consensus price objective of $154.55. The shares closed Tuesday at $150.54.

KLA-Tencor

This is the top pick at JPMorgan. KLA-Tencor Corp. (NASDAQ: KLAC) designs, manufactures and markets process control and yield management solutions worldwide.

It offers chip manufacturing products, such as front-end defect inspection tools, defect review systems, advanced packaging process control systems, metrology solutions, in-situ process monitoring products and lithography software; wafer manufacturing products comprising surface and defect inspection, wafer geometry and nanotopography metrology and data management; and reticle manufacturing products, such as defect inspection and pattern placement metrology products.

The company also provides light emitting diode (LED), power device and compound semiconductor manufacturing products consisting of patterned wafer inspection, defect inspection, surface metrology and data management products; thin-film head metrology and inspection, virtual lithography, in-situ process monitoring, transparent and metal substrate inspection and data management products for data storage media/head manufacturing; and stylus and optical profiling and optical inspection products for microelectromechanical systems manufacturing, as well as products for general purpose/lab applications.

JPMorgan cites the company’s strong execution, served available market (SAM) expansion and an industry leading financial model. The analyst also sees continued financial outperformance on strong market share and SAM expansion.

Shareholders are paid a solid 2.14% dividend. The $120 JPMorgan price objective is higher than the consensus target of $99.13. Shares closed higher than that at $100.81.

Orbotech

More aggressive accounts may find this is a smaller capitalization play interesting. Orbotech Ltd. (NASDAQ: ORBK) is a supplier of yield-enhancing and process-enabling solutions for the manufacture of electronics products. The Company provides cutting-edge solutions for use in the manufacture of printed circuit boards, flat panel displays (FPDs) and semiconductor devices. Its segments include Production Solutions for the Electronics Industry, Solar Energy and Recognition Software.

The company announced recently that Tianma Micro-Electronics, a producer of display solutions with over three decades of experience in the FPD field, selected Orbotech’s ArrayChecke and Automated Optical Inspection solutions for its production line upgrade to flexible AMOLED technology. Tianma has invested approximately $1.8 billion to extend its Gen 6 AMOLED fab in Wuhan, China. The Wuhan fab is designed for the production of flexible AMOLED display panels, which are rapidly gaining popularity in consumer electronics devices.

JPMorgan has set its price target at $42. The consensus target is $40, and the stock closed Tuesday at $35.46.

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These four top stocks to buy should continue to benefit from the worldwide use of semiconductors and the expansion of that use. All of them have run up over the past year, and it may make sense to buy small starting positions here and add on dips, should the market back up.

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