Eisman Says Buy Micron And SK Hynix. “In This Knife Fight You Want To Be The One Selling The Knives”
Steve Eisman thinks the real winners of the AI arms race are not the chip designers everyone is fighting over but the suppliers equipping both sides of the battle. Five stocks have already lapped Nvidia in 2026, and Eisman ranks…
Steve Eisman highlighted a subscriber email arguing the safest way to play the AI buildout is owning upstream suppliers rather than betting on any one chip designer. The key insight: “In this knife fight you want to be the one selling the knives.” The picks: ASML (NASDAQ:ASML | ASML Price Prediction), KLA (NASDAQ:KLAC), Lam Research (NASDAQ:LRCX), Applied Materials (NASDAQ:AMAT), Micron (NASDAQ:MU) and SK Hynix.
Micron is up 241.54% year to date; Applied Materials up 78.46% YTD; Lam Research up 75% YTD; ASML up 59.77% YTD; KLA up 49.35% YTD, all outpacing NVIDIA (NASDAQ:NVDA)’s 17.36% YTD gain. Eisman’s caveat: “The current AI ecosystem is dependent, almost completely dependent on the health of Anthropic and OpenAI,” and “if OpenAI fails within a year there will be a massive correction in the stock market.”
Here is our ranking of the five knife-sellers powering the AI capex cycle, judged on AI-driven revenue growth, backlog visibility, margin expansion, capacity plans and guidance direction.
5. KLA: Process Control’s Quiet Compounder
KLA anchors the yield-management layer every advanced fab depends on. The stock is up 49.35% YTD, though down 13.08% in the past month. As leading-edge logic and DRAM ramp, inspection intensity rises with every node shrink, keeping KLA as the default process-control pick.
4. Lam Research: Etch and Deposition Beneficiary
Lam sits directly in the DRAM and HBM buildout, where etch and deposition steps multiply with 3D memory scaling. Shares are up 75% YTD. The concern: a pullback has begun, and Lam’s memory concentration means an OpenAI-style shock to AI capex would hit here first.
3. Tokyo Electron: The Non-U.S. Diversifier
Tokyo Electron (OTC: TOELY) rounds out the WFE oligopoly with meaningful share in coater/developer, etch and deposition. It offers exposure to the same AI capex tailwinds without the U.S. export-control overhang that periodically weighs on American peers.
2. Applied Materials: Record Quarter, Rising 2027 Visibility
Applied Materials delivered fiscal Q3 2026 revenue of $9.12B, up 24.8% year over year, with non-GAAP EPS of $3.50 beating the $3.39 consensus. DRAM share of Semi Systems rose to 26% from 22%, and the company logged its 13th consecutive quarter of YoY gross margin expansion. Q4 guidance calls for revenue of roughly $10.25B and non-GAAP EPS of about $4.02. CEO Gary Dickerson said “we expect another strong record year in 2027” backed by plans to double quarterly system output by 2028. Shares trade at a forward P/E of 23 with an analyst target of $640.89 versus the current $427.91. AMAT is down 16.71% in the past month.
1. ASML: The Only EUV Game in Town
ASML tops the list because the AI logic and DRAM roadmap cannot advance without its EUV systems. Q2 2026 revenue hit $10.65B, up 21.3% YoY, with operating margin expanding to 37.1% from 34.6%. Management raised full-year 2026 guidance to $49.11B-$51.40B revenue at 54-56% gross margins and plans to add 30% to low-NA EUV capacity for 2027. CFO Roger Dassen said “For 2027, we are now close to being fully covered with orders for low NA EUV,” and CEO Christophe Fouquet described DRAM conditions as “the perfect storm for ASML on DRAM this year and most probably the next few years to come.” Backlog reached $45.06B, and a $12B share buyback program runs 2026-2028. The stock trades at a forward P/E of 26 against a $2,135.91 analyst target versus the current $1,641.46. ASML is down 8.96% in the past month.
Closing the Loop on the Knife-Sellers
The ranking reflects industry structure: ASML at the top on EUV monopoly and multi-year order coverage, Applied Materials second on record DRAM and HBM exposure, then Lam, Tokyo Electron and KLA. All five have outpaced NVIDIA in 2026. The one-month pullbacks in AMAT, KLA and Lam suggest the market is testing how much hyperscaler spending is truly durable. For readers who want to look beyond the fabs themselves, we profiled seven other AI-buildout suppliers, from power to cooling, in a free report you can grab here.
Contact [email protected] for any questions or corrections.
I've spent more than 15 years inside enterprise software, working alongside the finance, sales operations, and HR leaders who run the revenue engines at some of the largest tech companies in the country.
My day job is helping enterprise executives make smarter decisions about retention, compensation, and growth. These are the same operational levers that show up in every earnings report investors actually read. That perspective shapes my writing for 24/7 Wall St.
The headline numbers are easy. The interesting stuff is underneath: how companies make money, what executives are worried about, and what any of it means for the person checking their 401(k) on a Sunday afternoon. I write about personal finance and business as someone who has spent her career inside the rooms where these decisions get made.
