Semiconductor Underdogs: Why Veeco and Axcelis Are Quietly Gaining in the AI Hardware Race

If you’re still laser-focused on Nvidia’s every tick, you’re missing the real action in the semiconductor trenches. While the world obsesses over the AI arms race and mega-cap tech’s relentless bid for dominance, a pair of lesser-known chip equipment names, Veeco and Axcelis, are quietly positioning themselves as the next big winners in the hardware supply chain. The market’s gaze, as usual, is glued to the obvious: Nvidia, AMD, and the usual suspects. But the real story is happening a layer deeper, where the picks-and-shovels of the AI revolution are being forged.

The latest data out of MarketWatch (2026-03-28) flags both Veeco and Axcelis as undervalued relative to their larger peers. Their share prices have lagged, but their fundamentals are quietly improving. This is the classic set-up: the market’s narrative is stuck in Q1, but the smart money is already rotating into the next trade. With the S&P 500 and tech sector ETF $XLK both flatlining at $129.89, and volatility still lurking near the surface, traders are scouring for alpha in overlooked corners.

Let’s set the stage. Q1 2026 was a fever dream of AI euphoria, SaaS multiple compression, and geopolitical curveballs. The tech sector, as SeekingAlpha points out, now trades at a 20x P/E, matching the broader S&P 500 for the first time in years. Yet, it boasts 50% higher consensus long-term earnings growth. The problem? Everyone knows it. The crowd is in. So where’s the edge? Enter the chip equipment underdogs. Veeco and Axcelis don’t have the glitz, but they have something better: leverage to the most capital-intensive part of the AI buildout, and valuations that haven’t been bid to the moon.

The numbers tell the story. Veeco’s revenue growth is accelerating as demand for advanced packaging and lithography tools surges. Axcelis, meanwhile, is riding the wave of next-gen power semiconductors, think EVs, data centers, and, yes, AI inference hardware. Both companies have quietly landed major design wins in Asia and the US, locking in multi-year supply contracts while the Street sleeps on them. Institutional flows are picking up, but retail is nowhere to be found. That’s usually the sweet spot.

Meanwhile, the macro backdrop is anything but calm. The Strait of Hormuz is blocked, oil is flirting with triple digits, and the market is nervously eyeing the Fed’s next move. Yet, chip demand remains robust, with supply chain bottlenecks shifting from raw materials to the highly specialized equipment Veeco and Axcelis produce. This is not 2022’s chip shortage redux, this is a structural supply chain pivot, and the market hasn’t priced it in.

The historical analog here is instructive. In the early innings of every tech cycle, the equipment makers always lag the headline tech names. Then, as capacity constraints bite and capex ramps, they become the bottleneck, and the market wakes up. We saw it in the memory boom of 2017, the foundry supercycle of 2020, and now, potentially, in the AI hardware buildout of 2026. The difference this time? The Street is still obsessed with software multiples and ignoring the hardware plumbing.

Now, let’s get specific. Veeco is trading at a forward P/E of 14, with revenue growth accelerating to double digits. Axcelis, similarly, is priced at a discount to its historical average, despite gross margin expansion and a backlog that’s quietly ballooned to record levels. Both are off their 2025 highs, but institutional positioning is shifting. The CFTC’s upcoming speculative net positions report for the Nasdaq 100 will be a tell, if we see a pickup in long bets on chip equipment, expect the tape to move fast.

Strykr Watch

Technically, both Veeco and Axcelis are coiling just below key resistance levels. For Veeco, watch the $35 zone, if it breaks, the next stop is $40. Axcelis is flirting with $120; a clean move above opens up a run to $135. Both stocks are trading above their 50-day moving averages, with RSI in the low 60s, momentum is building, but not yet overbought. Volume has picked up on green days, suggesting accumulation rather than distribution. If the Nasdaq 100 holds its ground into Q2, these names could catch a bid from both fundamental and technical players.

The risk, of course, is that the macro backdrop turns toxic. If the Fed surprises hawkish or the oil shock spills over into broader risk-off, even the best stories can get dragged down. But here’s the thing: chip equipment is less exposed to consumer demand and more levered to capex cycles. If hyperscalers and foundries keep spending, these names have a margin of safety. Still, a break below the 50-day would invalidate the setup.

For traders looking for actionable setups, the playbook is straightforward. Long Veeco on a breakout above $35 with a stop at $32. Target $40. For Axcelis, buy strength above $120 with a stop at $112. Target $135. For the options crowd, consider call spreads to capture the upside while capping risk, implied vols are reasonable given the recent lull in tape action.

Strykr Take

This is the classic contrarian setup: the market is asleep at the wheel, fixated on mega-cap tech and missing the next leg of the AI hardware trade. Veeco and Axcelis are not household names, but that’s precisely the point. When the Street catches on, the move will be fast and unforgiving. Strykr Pulse 72/100. Threat Level 2/5. This is a trade for those willing to front-run the narrative, not chase it.