Cramer’s Case for the Semiconductor Equipment “Troika”
During the August 6 episode of CNBC’s Mad Money, host Jim Cramer pointed to the bottleneck in data center memory production and urged investors to focus on the companies building the fabrication machinery. He highlighted Lam Research Corporation (NASDAQ:LRCX), KLA Corporation (NASDAQ:KLAC), and Applied Materials, Inc. (NASDAQ:AMAT) as the backbone of American technology. Cramer stated:
Alright, look, we know, and you heard about it all day on the network, there is a shortage of every kind of memory in the universe of the data center. Owning the companies who need memory, we know that can be dicey, as we know from the crazy action in the stocks, so can owning the companies that actually make the memory. But owning the companies that make the machines that make the memory, wow. I think they’re the most consistent and the most valuable because there are no worries about demand, obviously, and they’re all flush. The semiconductor capital equipment troika is Lam Research, KLA, and Applied Materials.
Evaluating Executive Leadership Across the Big Three
Cramer added that a single winner among the trio remains difficult due to strong leadership across all three organizations. He highlighted personal connections and executive capability as major differentiators within the group. He commented:
It’s very difficult to pick just one because they’re so spectacular. Long-time viewers know that one of my all-time favorite guests is Rick Hill. He’s the retired CEO of Novellus, which sold itself to Lam Research. That makes me partial to Lam, and it doesn’t hurt that CEO Tim Archer is from the Rick Hill coaching tree. But this is not an easy choice. I regard Gary Dickerson, the CEO of Applied Materials, as the most vocal champion of the group, which, let there be no doubt, is the real intellectual property behind the American semiconductor food chain. These companies are the envy of the world, people, including China, which we’re constantly told is ahead of us in technology. No, they aren’t, at least not when it comes to making semiconductors. These three are our edge.
Hedge Fund Holdings Rise Across All Three Equipment Giants
While Cramer views all three as elite plays on memory demand, hedge fund positioning and valuation metrics highlight distinct profiles across the troika. Smart money expanded across the entire group in the first quarter of 2026. Applied Materials, Inc. (NASDAQ:AMAT) led institutional sentiment with 138 hedge funds holding positions in the stock, rising from 111 funds in the prior quarter. Lam Research Corporation (NASDAQ:LRCX) had 123 hedge fund positions compared to 104 in the previous quarter. Lastly, KLA Corporation (NASDAQ:KLAC) held 71 hedge fund positions in Q1 2026, marking an increase over 67 in the prior quarter.
When looking at valuations, KLA commands the highest valuation multiple at a forward price-to-earnings ratio of around 37x, showing its dominant positioning in process control and metrology tools. Both Lam Research and Applied Materials trade right behind at forward multiples of around 34x each.
Short interest across all three equipment providers stays low, which shows a minimal market appetite to bet against the chip machinery buildout. Lam Research Corporation (NASDAQ:LRCX) carries short interest at 2.64% of float, followed by KLA Corporation (NASDAQ:KLAC) at 2.39% and Applied Materials, Inc. (NASDAQ:AMAT) at 2.11%. The figures show limited bearish positioning that suggests ongoing fab expansions and memory shortages provide a resilient backdrop for all three operators.
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