The Zacks Analyst Blog Highlights SpaceX, Tesla KLA Corp, Onto Innovation, Applied Materials and Lam Research

Here are highlights from Friday’s Analyst Blog:

Tesla-SpaceX Terafab Bet: 4 Chip Equipment Stocks That Could Benefit

Elon Musk is betting big on chips. SpaceX and Tesla have committed an initial $16.8 billion to build Terafab, an AI semiconductor complex spanning more than 100 million square feet in Grimes County, TX. The vertically integrated facility is designed to handle chip manufacturing, packaging, and testing all under one roof.

A buildout of this scale could create opportunities for chip equipment makers like KLA Corp, Onto Innovation, Applied Materials and Lam Research.

Musk has pegged Tesla and SpaceX's future AI compute needs at over 1 terawatt annually— a figure that dwarfs current global chip output— and Terafab is meant to help close that gap. The chips from the Terafab plant will be engineered for edge computing and inference, purpose-built to power Tesla's Optimus robots and Cybercabs, alongside high-performance processors for SpaceX's space-based data centers.

As Tesla and SpaceX lean further into AI-dependent products, including autonomous robots, self-driving vehicles and orbital computing, owning manufacturing capacity in-house could mean fewer bottlenecks, less reliance on external suppliers and faster execution on projects central to Musk's roadmap. To pull it off, Intel has also stepped in as a manufacturing partner, lending its process technology and high-volume production expertise to the facility.

Beyond Intel, Terafab's buildout will require enormous amounts of specialized equipment— the tools that actually construct, inspect, and calibrate a fab of this size. No vendors have been named publicly yet, but a handful of companies dominate that space, and they stand to benefit as Terafab's plans unfold.

4 Top-Ranked Chip Equipment Stocks

KLA helps chipmakers detect defects and measure chip quality during the manufacturing process. It's like the quality-control specialist of a semiconductor factory. Since Terafab plans to manufacture logic chips, memory chips, and package them all in one facility, maintaining high production quality will be critical.

As chips become more advanced, manufacturers need even more inspection and testing, which should support demand for KLA's tools. The stock sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for KLA's fiscal 2027 and 2028 EPS implies year-over-year growth of 44% and 21%, respectively.

You can see the complete list of today's Zacks #1 Rank stocks here.

Onto provides inspection and measurement tools, with a strong focus on advanced chip packaging, including tools that help align and connect chip components as they are assembled. Terafab plans to handle packaging in-house, and since Musk's roadmap spans different chip types, that likely means a mix of packaging methods too.

As AI chips grow more complex, demand for advanced packaging keeps rising, and Onto has been benefiting from that trend. The stock sports a Zacks Rank #1. The Zacks Consensus Estimate for Onto's 2026 and 2027 EPS implies year-over-year growth of 45% and 40%, respectively.

Applied Materials sells a broad range of chipmaking equipment along with the installation and support services that go with them. That breadth matters for Terafab, which plans to produce advanced logic and memory chips in a single facility.

AI-driven demand is pushing more equipment spending toward this kind of advanced chipmaking, where Applied Materials already has an established presence. The stock carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for AMAT's fiscal 2026 and 2027 EPS implies year-over-year growth of 29% and 34%, respectively.

Lam Research specializes in etching precise patterns into wafers and depositing thin material layers onto them, both essential for building advanced memory and logic chips. The company's specialty lines go well with what the Terafab plant will need.

As chip designs get more complex, demand for etching and deposition tools tends to rise. The stock carries a Zacks Rank #2. The Zacks Consensus Estimate for Lam Research's fiscal 2027 and 2028 EPS implies year-over-year growth of 59% and 23%, respectively.

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