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Ultra Clean Holdings maintains strong fundamentals despite sector pullback, supported by robust Q2 results and a clear capacity expansion plan. UCTT targets $5 billion annual revenue by 2028, with capacity expansions aligned to rising WFE spending forecasts and direct customer demand. Management revised 2027 WFE spending guidance upward to $190-220 billion, positioning UCTT to achieve its UCT 3.0 framework ahead of schedule.

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Key Takeaways INOD is expanding AI data services as customer adoption and demand for higher-value work accelerate. SOUN raised its 2026 revenue outlook to $230 million to $260 million after strong second-quarter results.UCTT expects Q3 2026 revenues of $700 million to $750 million, up 12.4% sequentially at the midpoint. The artificial intelligence (AI) infrastructure trade has shifted from pure-play semiconductors to other AI-powered data center infrastructure. Here, we have identified three AI-driven small and mid-sized stocks that could be game changers in the future. These stocks are: Innodata Inc. (INOD - Free Report) , SoundHound AI Inc. (SOUN - Free Report) and Ultra Clean Holdings Inc. (UCTT - Free Report) . 

The chart below shows the price performance of our three picks year to date.

Image Source: Zacks Investment Research

Innodata Inc.Innodata continued to benefit from strong demand for data engineering services used to develop, train, evaluate and deploy advanced AI systems. INOD supports training and post-training data creation, model alignment, safety evaluation and enterprise AI deployment. 

INOD appears to be entering a stronger phase of AI-driven expansion, supported by accelerating customer adoption, improving profitability and a widening set of growth opportunities. The growth story is shifting toward higher-value services. INOD currently carries a Zacks Rank #3 (Hold).

Product InnovationsInnodata specializes in finding, cleaning, prepping, and labeling messy data so that generative, agentic, and physical AI models can mine and model it. Sometimes this even involves creating new synthetic data. Beyond supplying training data, INOD provides reasoning datasets, trust and safety services, model evaluation, agent optimization and physical AI support. 

INOD continues to focus on building a stronger delivery framework that supports rising project volume and new customer engagements across major technology clients. By scaling its global operations and enhancing technical delivery, it intends to manage increasing demand for complex data and AI integration projects. It will enable the company to maintain a competitive edge in the fast-evolving AI services market. 

Innodata released two public benchmarks designed to identify model failure modes and support follow-on data-generation work. The company is also developing physical-AI capabilities through robotics data collection and a planned motion-capture lab, with successful pilots moving discussions toward enterprise-scale multimodal programs.

Moreover, Innodata released the first stage of its AI Cyber Training Suite, including 12 datasets and evaluation systems focused on secure coding and vulnerability repair by AI agents. The company said that enterprise adoption of agentic AI is creating demand for assurance capabilities tied to the research platform INOD uses with frontier-model customers.

Strong GuidanceManagement reiterated its full-year 2026 revenue growth forecast of 40% or more year over year. The outlook reflects continued momentum across existing customer programs and a broadening customer base.

Solid Estimate RevisionsInnodata has an expected revenue and earnings growth rate of 42.1% and 28.3%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 9.3% over the last 30 days. 

INOD has an expected revenue and earnings growth rate of 28.1% and 41.7%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 0.6% over the last 30 days. 

Massive Price Upside PotentialThe short-term average price target of brokerage firms represents an increase of 114.9% from the last closing price of $57.13. The brokerage target price is currently in the range of $111-$140. This indicates a maximum upside of 145.1% and no downside. 

SoundHound AI Inc.SoundHound has seen record-high revenue growth in the last reported quarter driven by accelerating enterprise adoption of its OASYS agentic AI platform. SOUN’s expanding enterprise customer base, leadership in voice and agentic AI and debt-free balance sheet support its long-term growth outlook.

Growing Adoption of Conversational and Agentic AISOUN is benefiting from the rising enterprise adoption of conversational and agentic AI as businesses increasingly automate customer interactions across voice, chat and digital channels. The company has expanded beyond its traditional automotive business into restaurants, retail, healthcare, financial services, telecommunications, energy and other enterprise verticals, creating multiple long-term growth avenues.

SOUN has built one of the industry's most differentiated independent voice AI platforms with nearly two decades of research and development. Its proprietary Speech-to-Meaning and Deep Meaning Understanding technologies enable faster, more accurate conversational AI than traditional speech-to-text architectures. 

SOUN’s technology is now backed by more than 400 patents, while OASYS combines capabilities from SoundHound and acquired businesses into a unified platform for conversational and agentic AI. Currently, SOUN carries a Zacks Rank #2 (Buy).

Strong GuidanceSoundHound AI raised its full-year 2026 revenue outlook to $230 million to $260 million following strong second-quarter results. 

Strong Estimate RevisionsSoundHound AI has an expected revenue and earnings growth rate of 41% and -23.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 11.1% over the last 30 days.

SOUN has an expected revenue and earnings growth rate of 14.6% and 14.7%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 13.3% over the last 30 days.

Excellent Price Upside PotentialThe short-term average price target of brokerage firms represents an increase of 71.4% from the last closing price of $7.00. The brokerage target price is currently in the range of $7-$16. This indicates a maximum upside of 128.6% and no downside.

Ultra Clean Holdings Inc.Ultra Clean develops and supplies critical subsystems, components and parts, and cleaning and analytical services for the semiconductor industry in the United States and globally. The global semiconductor manufacturing equipment and materials industry is growing by leaps and bounds, buoyed by AI-driven capital expenditure. UCTT currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Robust Market OpportunitiesOn July 14, SEMI reported in its Mid-Year Total Semiconductor Equipment Forecast – OEM Perspective that the market size of this industry is expected to reach a record high globally at $165.9 billion in 2026, up 23.2% year over year. The momentum is set to continue in the near term, reaching an estimated $229.5 billion globally in 2028.

UCTT offers outsourced solutions for the development, design, component sourcing and cleaning, prototyping, engineering, and manufacturing and testing of advanced systems. UCTT offers its customers an integrated outsourced solution for gas delivery systems and other subassemblies, improved design-to-delivery cycle times, component-neutral design and manufacturing and component testing capabilities. 

Customers of UCTT are primarily original equipment manufacturers for the semiconductor capital equipment, flat panel, solar and medical device industries. Management said customers are sharing longer-range forecasts as system complexity and manufacturing requirements increase. UCTT sees opportunities to capture more outsourced subsystem work as customers prioritize final integration and testing capacity.

Strong GuidanceFor the third quarter of  2026, Ultra Clean expects revenues between $700 million and $750 million. The midpoint of $725 million implies sequential growth of 12.4%. Non-GAAP earnings are projected to be between $0.83 and $1.03 per share.

Management expects gross margin to move toward 17% through the rest of the year as utilization improves, while retaining its longer-term objective of more than 20% gross margin and more than 10% operating margin at a $4 billion revenue scale.

Solid Estimate RevisionsUltra Clean has an expected revenue and earnings growth rate of 32.1% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 23.6% over the last 30 days.

UCTT has an expected revenue and earnings growth rate of 36.9% and more than 100%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 33.9% over the last 30 days.

Huge Price Upside PotentialThe short-term average price target of brokerage firms represents an increase of 88.2% from the last closing price of $72.78. The brokerage target price is currently in the range of $120-$150. This indicates a maximum upside of 106.1% and no downside.

Ultra Clean Holdings (UCTT - Free Report) closed the last trading session at $92.91, gaining 0.3% over the past four weeks, but there could be plenty of upside left in the stock if short-term price targets set by Wall Street analysts are any guide. The mean price target of $137 indicates a 47.5% upside potential.

The mean estimate comprises five short-term price targets with a standard deviation of $13.96. While the lowest estimate of $120.00 indicates a 29.2% increase from the current price level, the most optimistic analyst expects the stock to surge 61.5% to reach $150.00. It's very important to note the standard deviation here, as it helps understand the variability of the estimates. The smaller the standard deviation, the greater the agreement among analysts.

While the consensus price target is highly sought after by investors, the ability and unbiasedness of analysts in setting price targets have long been questionable. And investors making investment decisions solely based on this tool would arguably do themselves a disservice.

But, for UCTT, an impressive average price target is not the only indicator of a potential upside. Strong agreement among analysts about the company's ability to report better earnings than they predicted earlier strengthens this view. While a positive trend in earnings estimate revisions doesn't gauge how much a stock could gain, it has proven to be powerful in predicting an upside.

Price, Consensus and EPS Surprise

Here's What You Should Know About Analysts' Price TargetsAccording to researchers at several universities across the globe, a price target is one of many pieces of information about a stock that misleads investors far more often than it guides. In fact, empirical research shows that price targets set by several analysts, irrespective of the extent of agreement, rarely indicate where the price of a stock could actually be heading.

While Wall Street analysts have deep knowledge of a company's fundamentals and the sensitivity of its business to economic and industry issues, many of them tend to set overly optimistic price targets. Are you wondering why?

They usually do that to drum up interest in shares of companies that their firms either have existing business relationships with or are looking to be associated with. In other words, business incentives of firms covering a stock often result in inflated price targets set by analysts.

However, a tight clustering of price targets, which is represented by a low standard deviation, indicates that analysts have a high degree of agreement about the direction and magnitude of a stock's price movement. While that doesn't necessarily mean the stock will hit the average price target, it could be a good starting point for further research aimed at identifying the potential fundamental driving forces.

That said, while investors should not entirely ignore price targets, making an investment decision solely based on them could lead to disappointing ROI. So, price targets should always be treated with a high degree of skepticism.

Here's Why There Could be Plenty of Upside Left in UCTTThere has been increasing optimism among analysts lately about the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher. And that could be a legitimate reason to expect an upside in the stock. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

The Zacks Consensus Estimate for the current year has increased 24.8% over the past month, as one estimate has gone higher compared to no negative revision.

Moreover, UCTT currently has a Zacks Rank #1 (Strong Buy), which means it is in the top 5% of more than 4,000 stocks that we rank based on four factors related to earnings estimates. Given an impressive externally-audited track record, this is a more conclusive indication of the stock's potential upside in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .

Therefore, while the consensus price target may not be a reliable indicator of how much UCTT could gain, the direction of price movement it implies does appear to be a good guide.

Ultra Clean Holdings (UCTT) earns a Hold rating after a 281% rally, as positive operating momentum is offset by weak cash flow and high leverage. Revenue, EBITDA, and operating income are recovering, driven by AI-related demand, but margins remain below cost-of-capital and free cash flow is negative. Inventory ballooned 61% year-over-year, absorbing $254M in cash and raising concerns about demand visibility and working capital management.

Ultra Clean (NASDAQ:UCTT) reported record second-quarter revenue as demand increased across its Products and Services businesses, with management pointing to AI-driven semiconductor investment and customer capacity expansions as key drivers of activity.

Chief Executive Officer James Xiao said the semiconductor capital-equipment environment is being reshaped by investment in artificial intelligence infrastructure. He said demand is extending beyond GPU-intensive training systems toward inference workloads that require greater CPU compute volumes, increasing the need for semiconductor manufacturing capacity and system complexity.

“Every layer of semiconductor manufacturing must scale to support this next wave of infrastructure investment and AI chip demand expansion beyond GPU and HBM,” Xiao said. He added that customers are providing longer planning horizons, allowing Ultra Clean to make decisions on capacity, supply-chain readiness, engineering resources and talent investment.

Second-Quarter Financial Results All financial figures discussed on the call were presented on a non-GAAP basis. Ultra Clean posted total revenue of $644.9 million in the second quarter, up from $533.7 million in the first quarter. Products revenue rose to $572.7 million from $465.7 million, while Services revenue increased to $72.2 million from $68 million.

Total gross margin was 16.7%, compared with 16.5% in the prior quarter. Products gross margin improved to 15.1% from 14.6%, while Services gross margin declined to 28.9% from 30%. Chief Financial Officer Sheri Savage said gross-margin improvement was primarily driven by higher volumes and related factory efficiencies, though margins remain subject to changes in volume, product mix, manufacturing region, material costs and transportation costs.

Operating expenses were $62.5 million, compared with $61.1 million in the first quarter, but declined as a percentage of revenue to 9.7% from 11.4%. Total operating margin rose to 7% from 5.1%. Net income was $32.3 million, or $0.70 per share based on 46 million shares outstanding, compared with net income of $14.5 million, or $0.31 per share, in the prior quarter.

Cash and cash equivalents totaled $255.9 million at quarter-end, down from $323.5 million in the prior quarter. Operating cash flow was negative $41.1 million, compared with negative $33.3 million in the first quarter. Savage said the year-to-date cash outflow reflected working-capital investment, particularly inventory intended to support anticipated demand.

Third-Quarter Outlook and Capacity Plans For the third quarter, Ultra Clean projected total revenue of $700 million to $750 million and earnings per share of $0.83 to $1.30.

Management said it is expanding capacity under its UCT 3.0 strategy. The company recently added 26,000 square feet of clean-room space at its Malaysia facility and plans further capacity additions within its existing Singapore and Czech Republic footprints.

Xiao said the company expects to have capacity for a $3.5 billion annualized revenue run rate by the end of 2026 and a $4 billion run rate during the first half of 2027. The company believes that capacity would support a wafer-fab-equipment market run rate of approximately $200 billion.

Ultra Clean is also evaluating additional expansion, including potential greenfield opportunities in Southeast Asia, to support a $5 billion annual revenue run rate. Xiao said the company’s previously communicated timeline anticipates reaching beyond $4 billion of capacity in the first half of 2028 and attaining a $5 billion run rate in the second half of that year.

The company has launched its first NPX Center of Excellence in Hillsboro, Oregon. Xiao said the center is intended to bring Ultra Clean into customer product-development cycles earlier, accelerate product qualification and improve transitions from development to high-volume production.

Customer Demand, Supply Chain and Margins During the question-and-answer session, Xiao said differences between Ultra Clean’s revenue timing and that of certain customers can reflect the time needed for customers to integrate the company’s subsystems into their own systems, as well as differing quarter-end schedules. Over a two-quarter period, he said Ultra Clean’s revenue growth has been in line with or above customer growth.

Xiao also said customers facing internal capacity constraints may increasingly outsource subsystem manufacturing to partners such as Ultra Clean while focusing their own resources on final testing and integration. He said this dynamic has historically created opportunities for Ultra Clean’s Products business to outgrow the market during upcycles.

Management said its largest two customers represented a reduced percentage of revenue, falling from 64% to the high-50% range, as the company expanded business with smaller customers. Xiao said Ultra Clean expects Services to grow at a double-digit rate in 2026 and 2027, with acceleration expected after factory ramps in the U.S., Korea and Taiwan.

On supply chain conditions, Xiao said Ultra Clean did not experience component shortages or delivery pushouts in the second quarter. He attributed that performance to an internal ramp-readiness effort that began earlier, though he said continued double-digit quarterly industry growth could place pressure on supply chains.

Savage said the company continues to target a 20% gross margin at a $4 billion revenue run rate, with the goal expected to be pursued during 2027. She said Ultra Clean expects gross margins to move toward 17% through the remainder of 2026 as factory utilization increases.

CFO Transition The call was Savage’s final earnings call as Ultra Clean’s CFO following 17 years with the company. Xiao thanked her for helping guide the company through periods of growth and transformation. Mike Keogh is set to become CFO on Aug. 5, according to the company.

About Ultra Clean (NASDAQ:UCTT) Ultra Clean Holdings, Inc is a global supplier of critical consumables and process tools for the semiconductor manufacturing industry. The company specializes in precision parts cleaning, chemical–mechanical planarization (CMP) slurries, surface conditioning pads, and specialty components used in wafer fabrication and advanced packaging. Ultra Clean also provides assembly and test hardware, tooling, and automated modules designed to support complex front-end and back-end processes in semiconductor fabs.

Ultra Clean’s product portfolio encompasses a range of cleaning systems and consumables aimed at particle and film removal, as well as CMP slurries and pads that are engineered for uniform material removal and planarization.

Key Takeaways UCTT's Q2 results beat expectations as AI demand lengthened forecasts and deepened early engagement.Capacity targets a $3.5B run rate by year-end 2026 and $5B in the second half of 2028.Q3 revenues are guided to $700M-$750M as gross margin moves toward 17% through 2026. Ultra Clean Holdings, Inc. (UCTT - Free Report) used its second-quarter call to frame demand around an AI-driven semiconductor equipment ramp. CEO James Xiao said activity strengthened across Products and Services as customers shared longer forecasts and engaged the company earlier in development cycles.

That visibility accompanied results above expectations and a third-quarter outlook above second-quarter levels. Analysts pressed management on whether capacity additions, factory utilization and supply-chain preparation can support the next growth phase while margins improve.

The company reported second-quarter non-GAAP earnings of 70 cents per share, beating the Zacks Consensus Estimate of 52 cents. Revenues of $644.9 million surpassed the $585.3 million consensus.

UCTT Sees Longer AI-Driven Planning HorizonsXiao said AI investment is increasing both the volume and complexity of customer requirements, extending demand beyond GPU-heavy training systems to broader compute infrastructure.

Xiao also said customers are providing longer planning horizons. That visibility is helping UCTT plan capacity, engineering resources, talent and supply-chain readiness around customer product road maps.

Xiao described earlier customer engagement as strategically important because UCTT can support qualification, manufacturing readiness and faster production ramps before programs reach high volume.

Ultra Clean Accelerates Capacity BuildoutThe company added 26,000 square feet of clean-room space in Malaysia and plans further expansion within existing facilities in Singapore and the Czech Republic.

In the Q&A, Xiao clarified that UCTT expects capacity for a $3.5 billion annualized revenue run rate by year-end 2026, $4 billion in the first half of 2027 and $5 billion in the second half of 2028.

Xiao also highlighted the first MPX Center of Excellence under the NPX initiative in Hillsboro, Ore., alongside digital upgrades using automation, analytics and AI-enabled tools to improve product transfers and operating visibility.

UCTT Pairs Q3 Growth With Margin AmbitionsUCTT guided third-quarter revenues to $700 million to $750 million and non-GAAP earnings to $0.83 to $1.03 per share.

Higher volume lifted non-GAAP gross margin to 16.7% and operating margin to 7%. UCTT is moving toward the 17% gross-margin range through the rest of 2026 while retaining a 20% goal at a $4 billion run rate.

Ultra Clean Funds the Ramp Through Working CapitalCash and cash equivalents fell to $255.9 million from $323.5 million in the prior quarter. Operating cash flow was negative $41.1 million after negative $33.3 million in the first quarter.

Management attributed the outflow to working-capital investment, particularly inventory intended to support anticipated demand and future growth.

Operating expenses rose to $62.5 million from $51.1 million, but declined to 9.7% of revenues from 11.4% as sales increased.

UCTT Q&A Tests Timing, Customers and SupplyA UBS analyst questioned whether third-quarter guidance understated growth relative to UCTT's largest customer. Xiao cited subsystem integration timing and different quarter-end dates, adding that aggregated two-quarter growth would be on par with customers or higher.

A TD Cowen analyst asked about business beyond the two largest customers. Xiao said their combined revenue share fell from 64% to the high-50% range as UCTT grew with lithography customers.

An Oppenheimer analyst asked about component shortages and delivery delays. Xiao said UCTT had neither in the quarter because it secured critical parts early, though double-digit sequential industry growth will keep pressure on the broader supply chain.

Ultra Clean Keeps Execution at the CenterXiao kept the call focused on ramp readiness, earlier co-innovation and capacity preparation aligned with customer forecasts.

CFO Sheri Brumm emphasized that mix, shipment location, materials and transportation costs can create quarterly margin variation.

Management's operating agenda remains capacity expansion, faster product qualification and disciplined execution as customer demand scales.

What Zacks Signals Say About UCTTUCTT currently sports a Zacks Rank #1 (Strong Buy), a signal tied to favorable earnings-estimate revision trends and potential near-term outperformance. The stock has a Value Score of D, Growth Score of D, Momentum Score of F and VGM Score of F. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks Style Scores rank A and B as the strongest grades, so UCTT's D and F readings provide weak confirmation across value, growth and momentum. The Zacks Rank can change as analysts revise estimates following the reported results.

5 Small-Cap Stocks to Watch in 2026 as Investors Rotate Out of Big TechUltra Clean NASDAQ: UCTT reported record second-quarter revenue as demand increased across its Products and Services businesses, with management pointing to AI-driven semiconductor investment and customer capacity expansions as key drivers of activity.

Chief Executive Officer James Xiao said the semiconductor capital-equipment environment is being reshaped by investment in artificial intelligence infrastructure. He said demand is extending beyond GPU-intensive training systems toward inference workloads that require greater CPU compute volumes, increasing the need for semiconductor manufacturing capacity and system complexity.

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3 Small-Cap Leaders Poised for Significant Growth“Every layer of semiconductor manufacturing must scale to support this next wave of infrastructure investment and AI chip demand expansion beyond GPU and HBM,” Xiao said. He added that customers are providing longer planning horizons, allowing Ultra Clean to make decisions on capacity, supply-chain readiness, engineering resources and talent investment.

Second-Quarter Financial Results All financial figures discussed on the call were presented on a non-GAAP basis. Ultra Clean posted total revenue of $644.9 million in the second quarter, up from $533.7 million in the first quarter. Products revenue rose to $572.7 million from $465.7 million, while Services revenue increased to $72.2 million from $68 million.

Total gross margin was 16.7%, compared with 16.5% in the prior quarter. Products gross margin improved to 15.1% from 14.6%, while Services gross margin declined to 28.9% from 30%. Chief Financial Officer Sheri Savage said gross-margin improvement was primarily driven by higher volumes and related factory efficiencies, though margins remain subject to changes in volume, product mix, manufacturing region, material costs and transportation costs.

Operating expenses were $62.5 million, compared with $61.1 million in the first quarter, but declined as a percentage of revenue to 9.7% from 11.4%. Total operating margin rose to 7% from 5.1%. Net income was $32.3 million, or $0.70 per share based on 46 million shares outstanding, compared with net income of $14.5 million, or $0.31 per share, in the prior quarter.

Cash and cash equivalents totaled $255.9 million at quarter-end, down from $323.5 million in the prior quarter. Operating cash flow was negative $41.1 million, compared with negative $33.3 million in the first quarter. Savage said the year-to-date cash outflow reflected working-capital investment, particularly inventory intended to support anticipated demand.

Third-Quarter Outlook and Capacity Plans For the third quarter, Ultra Clean projected total revenue of $700 million to $750 million and earnings per share of $0.83 to $1.30.

Management said it is expanding capacity under its UCT 3.0 strategy. The company recently added 26,000 square feet of clean-room space at its Malaysia facility and plans further capacity additions within its existing Singapore and Czech Republic footprints.

Xiao said the company expects to have capacity for a $3.5 billion annualized revenue run rate by the end of 2026 and a $4 billion run rate during the first half of 2027. The company believes that capacity would support a wafer-fab-equipment market run rate of approximately $200 billion.

Ultra Clean is also evaluating additional expansion, including potential greenfield opportunities in Southeast Asia, to support a $5 billion annual revenue run rate. Xiao said the company’s previously communicated timeline anticipates reaching beyond $4 billion of capacity in the first half of 2028 and attaining a $5 billion run rate in the second half of that year.

The company has launched its first NPX Center of Excellence in Hillsboro, Oregon. Xiao said the center is intended to bring Ultra Clean into customer product-development cycles earlier, accelerate product qualification and improve transitions from development to high-volume production.

Customer Demand, Supply Chain and Margins During the question-and-answer session, Xiao said differences between Ultra Clean’s revenue timing and that of certain customers can reflect the time needed for customers to integrate the company’s subsystems into their own systems, as well as differing quarter-end schedules. Over a two-quarter period, he said Ultra Clean’s revenue growth has been in line with or above customer growth.

Xiao also said customers facing internal capacity constraints may increasingly outsource subsystem manufacturing to partners such as Ultra Clean while focusing their own resources on final testing and integration. He said this dynamic has historically created opportunities for Ultra Clean’s Products business to outgrow the market during upcycles.

Management said its largest two customers represented a reduced percentage of revenue, falling from 64% to the high-50% range, as the company expanded business with smaller customers. Xiao said Ultra Clean expects Services to grow at a double-digit rate in 2026 and 2027, with acceleration expected after factory ramps in the U.S., Korea and Taiwan.

On supply chain conditions, Xiao said Ultra Clean did not experience component shortages or delivery pushouts in the second quarter. He attributed that performance to an internal ramp-readiness effort that began earlier, though he said continued double-digit quarterly industry growth could place pressure on supply chains.

Savage said the company continues to target a 20% gross margin at a $4 billion revenue run rate, with the goal expected to be pursued during 2027. She said Ultra Clean expects gross margins to move toward 17% through the remainder of 2026 as factory utilization increases.

CFO Transition The call was Savage’s final earnings call as Ultra Clean’s CFO following 17 years with the company. Xiao thanked her for helping guide the company through periods of growth and transformation. Mike Keogh is set to become CFO on Aug. 5, according to the company.

About Ultra Clean (NASDAQ:UCTT)Ultra Clean Holdings, Inc is a global supplier of critical consumables and process tools for the semiconductor manufacturing industry. The company specializes in precision parts cleaning, chemical–mechanical planarization (CMP) slurries, surface conditioning pads, and specialty components used in wafer fabrication and advanced packaging. Ultra Clean also provides assembly and test hardware, tooling, and automated modules designed to support complex front-end and back-end processes in semiconductor fabs.

Ultra Clean's product portfolio encompasses a range of cleaning systems and consumables aimed at particle and film removal, as well as CMP slurries and pads that are engineered for uniform material removal and planarization.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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, /PRNewswire/ -- Ultra Clean Holdings, Inc. (Nasdaq: UCTT), today reported its financial results for the second quarter ended June 26, 2026.

"UCT delivered second quarter results above the top end of our guided range reflecting strong operational execution and increasing customer demand," said James Xiao, CEO. "The long-term outlook for semiconductor manufacturing remains compelling as AI continues to drive investment across the industry. Our priority is executing UCT 3.0 by expanding our global manufacturing capacity, enhancing engineering and operational capabilities, and accelerating digital transformation. Together, these initiatives position us to support our customers with greater speed, agility, and scale while delivering sustainable, profitable growth and creating long-term value for our shareholders."

Second Quarter 2026 GAAP Financial Results
Total revenue was $644.9 million. Products contributed $572.7 million and Services added $72.2 million. Total gross margin was 16.1%, operating margin was 4.6%, and net income was $8.7 million or $0.19 per diluted share. This compares to total revenue of  $533.7 million, gross margin of 15.8%, operating margin of 2.1%, and net loss of $(17.9) million or $(0.40) per diluted share, in the prior quarter.

Second Quarter 2026 Non-GAAP Financial Results
On a non-GAAP basis, gross margin was 16.7%, operating margin was 7.0%, and net income was $32.3 million or $0.70 per diluted share. This compares to gross margin of 16.5%, operating margin of 5.1%, and net income of $14.5 million or $0.31 per diluted share in the prior quarter.

Third Quarter 2026 Outlook
The Company expects revenue in the range of $700 million to $750 million. The Company expects GAAP diluted net income per share to be between $0.67 and $0.87 and non-GAAP diluted net income per share to be between $0.83 and $1.03.

Conference Call
The call will take place at 1:45 p.m. PT and can be accessed by dialing 1-800-836-8184 or 1-646-357-8785. No passcode is required. A replay of the call will be available by dialing 1-888-660-6345 or 1-646-517-4150 and entering the confirmation code 68934#. The Webcast will be available on the Investor Relations section of the Company's website at http://uct.com/investors/events/.

About Ultra Clean Holdings, Inc. 
Ultra Clean Holdings, Inc. is a leading developer and supplier of critical subsystems, components, parts, and ultra-high purity cleaning and analytical services, primarily for the semiconductor industry. Under its Products division, UCT offers its customers an integrated outsourced solution for major subassemblies, improved design-to-delivery cycle times, design for manufacturability, prototyping, and high-precision manufacturing. Under its Services Division, UCT offers its customers tool chamber parts cleaning and coating, as well as micro-contamination analytical services. Ultra Clean is headquartered in Hayward, California. Additional information is available at www.uct.com.

Use of Non-GAAP Measures
In addition to providing results that are determined in accordance with Generally Accepted Accounting Principles in the United States of America ("GAAP"), management uses non-GAAP gross margin, non-GAAP operating margin and non-GAAP net income to evaluate the Company's operating and financial results. We believe the presentation of non-GAAP results is useful to investors for analyzing our core business and business trends and comparing performance to prior periods, along with enhancing investors' ability to view the Company's results from management's perspective. The presentation of this additional information should not be considered a substitute for results prepared in accordance with GAAP. Tables presenting reconciliations from GAAP results to non-GAAP results are included at the end of this press release.

The Company defines non-GAAP net income as net loss before amortization of intangible assets, stock-based compensation, restructuring charges, debt refinancing costs, legal-related costs, unrealized loss (gain) on foreign exchange, and the tax effects of the foregoing adjustments.

A reconciliation of our guidance for non-GAAP net income per diluted share for the subsequent quarter is not available due to fluctuations in the geographic mix of our earnings from quarter to quarter, which impacts our tax rate and cannot be reasonably predicted or determined. As a result, such reconciliation is not available without unreasonable efforts and we are unable to determine the probable significance of the unavailable information.

Safe Harbor Statement 
The foregoing information contains, or may be deemed to contain, "forward-looking statements" (as defined in the US Private Securities Litigation Reform Act of 1995) which reflect our current views with respect to future events and financial performance. We use words such as "anticipates," "projection," "outlook," "forecast," "believes," "plan," "expect," "future," "intends," "may," "will," "estimates," "see," "predicts," "should" and similar expressions to identify these forward-looking statements. Forward looking statements included in this press release include our expectations about the semiconductor capital equipment market and outlook. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, the Company's actual results may differ materially from the results predicted or implied by these forward-looking statements. These risks, uncertainties and other factors also include, among others, those identified in "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in our annual report on Form 10-K for the year ended December 26, 2025, as filed with the Securities and Exchange Commission. Ultra Clean Holdings, Inc. undertakes no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise unless required by law.

Contact:
Rhonda Bennetto
SVP Investor Relations
[email protected]

 ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; in millions, except per share data)

Three Months Ended

Six Months Ended

June 26,
2026

June 27,
2025

June 26,
2026

June 27,
2025

Revenues:

Products

$       572.7

$       454.9

$     1,038.4

$       911.9

Services

72.2

63.9

140.2

125.5

Total revenues

644.9

518.8

1,178.6

1,037.4

Cost of revenues:

Products

488.8

393.3

889.5

783.5

Services

52.4

46.0

101.0

90.4

Total cost revenues

541.2

439.3

990.5

873.9

Gross margin

103.7

79.5

188.1

163.5

Operating expenses:

Research and development

8.8

7.8

17.4

15.4

Sales and marketing

16.4

15.5

31.9

30.5

General and administrative

49.0

46.9

98.0

95.4

Impairment of goodwill

—

151.1

—

151.1

Total operating expenses

74.2

221.3

147.3

292.4

Income (loss) from operations

29.5

(141.8)

40.8

(128.9)

Interest income

1.0

0.8

2.4

1.9

Interest expense

(1.1)

(10.1)

(8.3)

(20.0)

Other income (expense), net

0.6

(2.2)

(0.7)

(1.3)

Income (loss) before provision for income taxes

30.0

(153.3)

34.2

(148.3)

Provision for income taxes

18.1

7.2

37.2

14.6

Net income (loss)

11.9

(160.5)

(3.0)

(162.9)

Less: Net income attributable to noncontrolling
interests

3.2

1.5

6.2

4.1

Net income (loss) attributable to UCT

$          8.7

$      (162.0)

$         (9.2)

$      (167.0)

Net income (loss) per share attributable to UCT common stockholders:

Basic

$         0.19

$       (3.58)

$       (0.20)

$       (3.70)

Diluted

$         0.19

$       (3.58)

$       (0.20)

$       (3.70)

Shares used in computing net income (loss) per share:

Basic

45.1

45.2

45.2

45.2

Diluted

46.1

45.2

45.2

45.2

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; in millions)

June 26,
2026

December 26,
2025

ASSETS

Current assets:

Cash and cash equivalents

$         255.9

$         311.8

Accounts receivable, net of allowance for credit losses

208.0

208.8

Inventories

629.9

390.9

Prepaid expenses and other current assets

66.7

48.2

Total current assets

1,160.5

959.7

Property, plant and equipment, net

323.7

324.6

Goodwill

114.2

114.2

Intangible assets, net

143.2

156.8

Deferred tax assets, net

4.4

3.5

Operating lease right-of-use assets

158.1

157.2

Other non-current assets

14.0

13.0

Total assets

$      1,918.1

$       1,729.0

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current portion of long-term debt

$             —

$            9.9

Accounts payable

300.6

194.9

Accrued compensation and related benefits

62.4

51.1

Operating lease liabilities

21.5

20.2

Other current liabilities

40.2

24.6

Total current liabilities

424.7

300.7

Long-term debt

599.4

467.0

Deferred tax liabilities

14.1

13.8

Operating lease liabilities

155.0

156.6

Other liabilities

7.8

6.8

Total liabilities

1,201.0

944.9

Equity:

UCT stockholders' equity:

Common stock

0.1

0.1

Additional paid-in capital

560.8

578.7

Common shares held in treasury

(88.7)

(48.4)

Retained earnings

180.0

189.2

Accumulated other comprehensive loss

(12.4)

(8.6)

Total UCT stockholders' equity

639.8

711.0

Noncontrolling interests

77.3

73.1

Total equity

717.1

784.1

Total liabilities and equity

$      1,918.1

$       1,729.0

ULTRA CLEAN HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited; in millions)

Six Months Ended

June 26,
2026

June 27,
2025

(In millions) 

Cash flows from operating activities:

Net loss

$            (3.0)

$         (162.9)

Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:

Depreciation and amortization

24.8

23.4

Amortization of intangible assets

13.7

14.3

Stock-based compensation

9.6

10.0

Amortization of debt issuance costs

1.6

1.1

Impairment of goodwill

—

151.1

Loss on extinguishment of debt

3.4

—

Loss on disposal of property, plant and equipment

1.2

0.1

Change in the fair value of financial instruments

—

(0.1)

Deferred income taxes

(0.5)

0.6

Changes in assets and liabilities:

Accounts receivable

0.8

34.3

Inventories

(238.9)

5.4

Prepaid expenses and other current assets

(13.8)

(7.8)

Other non-current assets

0.9

(0.5)

Accounts payable

104.4

(11.9)

Accrued compensation and related benefits

11.3

(2.6)

Income taxes payable

(2.5)

(4.2)

Operating lease right-of-use assets and operating lease liabilities

(1.2)

11.1

Other liabilities

13.8

(4.0)

Net cash provided by (used in) operating activities

(74.4)

57.4

Cash flows from investing activities:

Purchases of property, plant and equipment

(25.8)

(29.2)

Proceeds from sale of equipment

0.1

0.1

Net cash used in investing activities

(25.7)

(29.1)

Cash flows from financing activities:

Proceeds from the issuance of convertible notes

600.0

—

Borrowings on revolving credit facility

15.0

—

Proceeds from issuance of common stock

1.1

1.1

Payment of debt issuance costs

(17.4)

(0.6)

Repurchase of common stock

(40.0)

(3.4)

Payment for capped call transactions

(25.1)

—

Principal payments on bank borrowings

(481.5)

(15.1)

Employees' taxes paid upon vesting of restricted stock units

(3.5)

(0.7)

Payments of dividends to a joint venture shareholder

(0.1)

(0.1)

Net cash provided by (used in) financing activities

48.5

(18.8)

Effect of exchange rate changes on cash and cash equivalents

(4.3)

4.0

Net increase (decrease) in cash and cash equivalents

(55.9)

13.5

Cash and cash equivalents at beginning of period

311.8

313.9

Cash and cash equivalents at end of period

$          255.9

$          327.4

ULTRA CLEAN HOLDINGS, INC.

REPORTABLE SEGMENTS

GAAP TO NON-GAAP RECONCILIATION

(Unaudited; dollars in millions)

GAAP

Non-GAAP

Three Months Ended

Three Months Ended

June 26, 2026

June 26, 2026

Products

Services

Consolidated

Products

Services

Consolidated

Revenues

$   572.7

$   72.2

$         644.9

$     572.7

$       72.2

$         644.9

Gross profit

$     83.9

$   19.8

$         103.7

$       86.7

$       20.9

$         107.6

Gross margin

14.6 %

27.4 %

16.1 %

15.1 %

28.9 %

16.7 %

Income from operations

$     24.8

$     4.7

$           29.5

$       37.0

$         8.1

$           45.1

Operating margin

4.3 %

6.6 %

4.6 %

6.5 %

11.2 %

7.0 %

Three Months Ended

June 26, 2026

Products

Services

Consolidated

Reconciliation of GAAP Gross profit to Non-GAAP Gross profit (in millions)

Reported gross profit on a GAAP basis

$      83.9

$       19.8

$     103.7

Amortization of intangible assets (1)

1.3

1.0

2.3

Stock-based compensation expense (2)

1.5

—

1.5

Restructuring charges (3)

—

0.1

0.1

Non-GAAP gross profit

$      86.7

$       20.9

$     107.6

Reconciliation of GAAP Gross margin to Non-GAAP Gross margin

Reported gross margin on a GAAP basis

14.6 %

27.4 %

16.1 %

Amortization of intangible assets (1)

0.2 %

1.4 %

0.4 %

Stock-based compensation expense (2)

0.3 %

— %

0.2 %

Restructuring charges (3)

— %

0.1 %

— %

Non-GAAP gross margin

15.1 %

28.9 %

16.7 %

Reconciliation of GAAP Income from operations to Non-GAAP Income from operations (in millions)

Reported income from operations on a GAAP basis

$      24.8

$        4.7

$       29.5

Amortization of intangible assets (1)

3.9

2.9

6.8

Stock-based compensation expense (2)

7.6

0.5

8.1

Restructuring charges (3)

0.7

—

0.7

Non-GAAP income from operations

$      37.0

$        8.1

$       45.1

Reconciliation of GAAP Operating margin to Non-GAAP Operating margin

Reported operating margin on a GAAP basis

4.3 %

6.6 %

4.6 %

Amortization of intangible assets (1)

0.7 %

4.0 %

1.0 %

Stock-based compensation expense (2)

1.3 %

0.6 %

1.3 %

Restructuring charges (3)

0.1 %

— %

0.1 %

Non-GAAP operating margin

6.5 %

11.2 %

7.0 %

1    Amortization of intangible assets related to the Company's business acquisitions

2    Represents compensation expense for stock granted to employees and directors

3    Represents costs associated with employee separation, severance, retention, and other expenses related to facility closures

ULTRA CLEAN HOLDINGS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP ADJUSTED RESULTS

Three Months Ended

June 26,
2026

June 27,
2025

March 27,
2026

Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income (in millions)

Reported net income (loss) attributable to UCT on a GAAP basis

$        8.7

$    (162.0)

$     (17.9)

Amortization of intangible assets (1)

6.8

7.0

6.9

Stock-based compensation expense (2)

8.1

7.1

4.0

Restructuring charges (3)

0.7

4.8

4.8

Debt refinancing costs expensed (4)

0.7

—

3.0

Legal-related costs (5)

—

0.3

—

Unrealized loss (gain) on foreign exchange (6)

(1.9)

3.7

(1.1)

Impairment of goodwill (7)

—

151.1

—

Income tax effect of non-GAAP adjustments (8)

(2.9)

(34.9)

(3.5)

Income tax effect of valuation allowance (9)

12.1

37.9

18.3

Non-GAAP net income attributable to UCT

$       32.3

$       15.0

$       14.5

Reconciliation of GAAP Income (Loss) from operations to Non-GAAP Income from operations (in millions)

Reported income (loss) from operations on a GAAP basis

$       29.5

$    (141.8)

$       11.4

Amortization of intangible assets (1)

6.8

7.0

6.9

Stock-based compensation expense (2)

8.1

7.1

4.0

Restructuring charges (3)

0.7

4.8

4.8

Legal-related costs (5)

—

0.3

—

Impairment of goodwill (7)

—

151.1

—

Non-GAAP income from operations

$       45.1

$       28.5

$       27.1

Reconciliation of GAAP Operating margin to Non-GAAP Operating margin

Reported operating margin on a GAAP basis

4.6 %

(27.3) %

2.1 %

Amortization of intangible assets (1)

1.0 %

1.3 %

1.3 %

Stock-based compensation expense (2)

1.3 %

1.4 %

0.8 %

Restructuring charges (3)

0.1 %

0.9 %

0.9 %

Legal-related costs (5)

— %

0.1 %

— %

Impairment of goodwill (7)

— %

29.1 %

— %

Non-GAAP operating margin

7.0 %

5.5 %

5.1 %

Reconciliation of GAAP Gross profit to Non-GAAP Gross profit (in millions)

Reported gross profit on a GAAP basis

$     103.7

$       79.5

$       84.4

Amortization of intangible assets (1)

2.3

2.3

2.3

Stock-based compensation expense (2)

1.5

0.4

1.2

Restructuring charges (3)

0.1

2.4

0.3

Non-GAAP gross profit

$     107.6

$       84.6

$       88.2

Reconciliation of GAAP Gross margin to Non-GAAP Gross margin

Reported gross margin on a GAAP basis

16.1 %

15.3 %

15.8 %

Amortization of intangible assets (1)

0.4 %

0.4 %

0.4 %

Stock-based compensation expense (2)

0.2 %

0.1 %

0.2 %

Restructuring charges (3)

— %

0.5 %

0.1 %

Non-GAAP gross margin

16.7 %

16.3 %

16.5 %

Reconciliation of GAAP Other income (expense), net to Non-GAAP Other income (expense), net (in millions)

Reported Other income (expense), net on a GAAP basis

$        0.6

$       (2.2)

$       (1.3)

Debt refinancing costs expensed (4)

0.7

—

3.0

Unrealized loss (gain) on foreign exchange (6)

(1.9)

3.7

(1.1)

Non-GAAP Other income (expense), net

$       (0.6)

$        1.5

$        0.6

Reconciliation of GAAP Income (Loss) Per Diluted Share to Non-GAAP Earnings Per Diluted Share

Reported net income (loss) on a GAAP basis

$       0.19

$     (3.58)

$     (0.40)

Amortization of intangible assets (1)

0.15

0.15

0.15

Stock-based compensation expense (2)

0.18

0.16

0.09

Restructuring charges (3)

0.01

0.10

0.10

Debt refinancing costs expensed (4)

0.01

—

0.06

Legal-related costs (5)

—

0.01

—

Unrealized loss (gain) on foreign exchange (6)

(0.04)

0.08

(0.02)

Impairment of goodwill (7)

—

3.34

—

Income tax effect of non-GAAP adjustments (8)

(0.06)

(0.77)

(0.08)

Income tax effect of valuation allowance (9)

0.26

0.84

0.40

Impact of dilutive shares

—

—

0.01

Non-GAAP net earnings

$       0.70

$       0.33

$       0.31

Weighted average number of diluted shares (in millions) on a
non-GAAP basis (10)

46.0

45.3

46.3

ULTRA CLEAN HOLDINGS, INC.

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP EFFECTIVE INCOME TAX RATE

Three Months Ended

June 26,
2026

June 27,
2025

March 27,
2026

Provision for income taxes on a GAAP basis

$       18.1

$         7.2

$       19.2

Income tax effect of non-GAAP adjustments (8)

2.9

34.9

3.5

Income tax effect of valuation allowance (9)

(12.1)

(37.9)

(18.3)

Non-GAAP provision for income taxes

$         8.9

$         4.2

$         4.4

Income before income taxes on a GAAP basis

$       30.0

$    (153.3)

$         4.2

Amortization of intangible assets (1)

6.8

7.0

6.9

Stock-based compensation expense (2)

8.1

7.1

4.0

Restructuring charges (3)

0.7

4.8

4.8

Debt refinancing costs expensed (4)

0.7

—

3.0

Legal-related costs (5)

—

0.3

—

Unrealized loss (gain) on foreign exchange (6)

(1.9)

3.7

(1.1)

Impairment of goodwill (7)

—

151.1

—

Non-GAAP income before income taxes

$       44.4

$       20.7

$       21.8

Effective income tax rate on a GAAP basis

60.3 %

(4.7) %

457.1 %

Non-GAAP effective income tax rate

20.0 %

20.3 %

20.0 %

1

Amortization of intangible assets related to the Company's business acquisitions

2

Represents compensation expense for stock granted to employees and directors

3

Represents costs associated with employee separation, severance, retention, and other expenses related to facility closures

4

Represents certain third party transaction costs related to the amended credit agreement and the previously capitalized costs of extinguished debt

5

Represents estimated costs related to certain legal proceedings

6

Represents unrealized foreign exchange gains and losses arising from the remeasurement of monetary assets and liabilities

7

 Represents non-cash charges related to the impairment of goodwill

8

Tax effect of items (1) through (7) above based on the non-GAAP tax rate

9

The Company's GAAP tax expense is generally higher than the Company's non-GAAP tax expense, primarily due to losses in the U.S. with full federal and state valuation allowances. The Company's non-GAAP tax rate and resulting non-GAAP tax expense considers the tax implications as if there was no federal or state valuation allowance position in effect

10

Non-GAAP diluted weighted-average common shares are adjusted to reflect the dilutive impact of our convertible note based on the higher note hedge strike price instead of the initial conversion price

SOURCE Ultra Clean Holdings, Inc.

On July 24, 2026, Ultra Clean Holdings Inc (UCTT) shares fell 7.8% to a current price of $92.75. The stock has experienced considerable volatility, with a 52-we

Key Takeaways TTMI is benefiting from AI-driven demand for advanced PCBs, RF components and a growing backlog.UCTT is expanding with semiconductor equipment demand, advanced packaging and manufacturing solutions.UCTT trades at a lower forward earnings multiple than TTMI, offering a more attractive valuation. TTM Technologies (TTMI - Free Report) and Ultra Clean Holdings (UCTT - Free Report) are key suppliers to the semiconductor manufacturing ecosystem and are benefiting from the rapid buildout of AI infrastructure. TTMI provides advanced printed circuit boards (PCBs) and RF components used in AI, networking and semiconductor applications, while UCTT supplies critical subsystems and ultra-high-purity manufacturing solutions that enable semiconductor equipment manufacturing.

Both companies are benefiting from rising semiconductor capital spending, driven by growing investment in AI data centers, advanced packaging and next-generation chip manufacturing. As AI infrastructure spending continues to accelerate, both stocks are well-positioned to capitalize on this secular growth trend. Let's delve deep to determine which one is a better investment now.

The Case for TTMITTM Technologies has established itself as a leading supplier of advanced PCBs, RF components and engineered interconnect solutions that support semiconductor manufacturing and AI infrastructure. As semiconductor devices grow more complex, demand has been driven by high-layer-count PCBs that enable advanced processors, accelerators and networking equipment used in AI data centers. TTMI has expanded its capabilities across advanced packaging, substrates and integrated modules, moving it higher up the electronics value chain while strengthening its position within the semiconductor supply chain. Its diversified global manufacturing footprint has enhanced supply chain flexibility, while its presence in aerospace and defense adds a stable, high-value demand source.

TTMI's growth has been supported by rising AI infrastructure investment across data center and networking applications, where higher-performance interconnect solutions have become critical. Forward demand visibility is reinforced by a book-to-bill ratio of 1.41 in the first quarter of 2026, with the commercial segment at 1.65, alongside a 90-day backlog of $787 million, up from $517 million a year earlier. Revenues rose 30% year over year to $846 million in the first quarter, driven by a 61% increase in data center and networking revenues, while aerospace and defense revenues grew 11%. Adjusted EBITDA margin expanded 40 basis points to 15.7% on a favorable mix and operating leverage.

The Zacks Consensus Estimate for TTMI's 2026 EPS is pegged at $4.13, down by 4 cents over the past 30 days, indicating 67.9% year-over-year growth, reflecting expectations of sustained earnings expansion as semiconductor capital spending and AI infrastructure investment continue.

The Case for UCTTUltra Clean Holdings has built its business around critical subsystems, ultra-high purity manufacturing solutions and outsourced services that enable advanced semiconductor manufacturing, positioning it at the center of wafer fabrication equipment expansion. As AI-driven computing increases demand for advanced logic, high bandwidth memory and advanced packaging, UCTT has benefited from rising investment in semiconductor fabrication equipment. Its UCT 3.0 strategy, centered on ramp readiness, new product introduction and digital transformation, has strengthened manufacturing efficiency while enabling customers to accelerate production ramps. A scalable global manufacturing footprint has further enhanced the company's ability to support growing customer demand with limited incremental capital investment.

Higher process complexity and rising equipment intensity in deposition, etch, and advanced packaging have continued to expand UCTT's addressable market, while growing wafer starts have supported its services business. These trends have already begun translating into stronger financial performance. First-quarter 2026 revenues increased to $533.7 million, gross margin expanded 40 basis points sequentially to 16.5%, and EPS improved 7 cents sequentially to 31 cents. Second-quarter guidance pointed to further revenue and earnings growth, reflecting continued momentum across the semiconductor equipment market.

The Zacks Consensus Estimate for UCTT's 2026 EPS is pegged at $2.46 per share, unchanged over the past 30 days, suggesting 134.3% year-over-year growth as AI-driven semiconductor investments and WFE spending continue to support earnings expansion.

Price Performance and Valuation of TTMI & UCTTWhile both stocks have been exceptional year-to-date (YTD) performers, UCTT's 264.9% return has outpaced TTMI's 91.3% appreciation, reflecting Ultra Clean's sharper earnings growth trajectory tied to the WFE upcycle.

TTMI vs UCTT: YTD Performance
Image Source: Zacks Investment Research

UCTT offers a more attractive valuation, trading at 24.27X forward 12-month earnings versus 27.04X for TTMI. The lower multiple, combined with stronger earnings growth expectations, points to a more favorable risk-reward setup for UCTT.

TTMI vs UCTT: Valuation
Image Source: Zacks Investment Research

ConclusionBoth TTM Technologies and Ultra Clean Holdings remain well-positioned to benefit from accelerating AI infrastructure investment and rising semiconductor capital spending. TTMI continues to capitalize on strong demand for advanced interconnect solutions, supported by expanding AI networking deployments and a growing backlog. However, UCTT stands out with stronger projected earnings growth, superior year-to-date share price performance and a more attractive valuation.

UCTT currently sports a Zacks Rank #1 (Strong Buy), while TTMI has a Zacks Rank #2 (Buy). Given its favorable growth outlook and valuation, UCTT appears to be a smarter investment over TTMI at current levels. You can see the complete list of today's Zacks #1 Rank stocks here.

Brian E. Harding, Chief Accounting Officer of Ultra Clean Holdings, Inc. (UCTT +0.07%), sold 3,837 shares of common stock at $128.75 per share on July 2, 2026, according to an SEC Form 4 filing.

Transaction summaryMetricValueShares sold (direct)3,837Transaction value~$494,000Post-transaction shares (directly held)33,581Post-transaction value$3.58 millionKey questionsWhat was the structural nature of this disposition?
The sale was systematic rather than discretionary, occurring via a Rule 10b5-1 plan adopted four months prior to execution to manage the insider's equity position.How does this impact the insider's total equity position?
Following the disposal, Harding maintains direct ownership of 33,581 shares.What is the financial context of the company at the time of the transaction?
Ultra Clean Holdings reported trailing twelve-month revenue of $2.1 billion and a net loss of $194.1 million, as the stock was priced at $105.53 as of the July 6, 2026 market close.What was the price context relative to the broader market close?
While shares were sold at a weighted average of $128.75, the stock closed at $106.48 on the transaction date, illustrating execution within the day's higher price bands.Company OverviewMetricValueShare Price (as of market close 2026-07-06)$105.53Market Capitalization$4.1 billionRevenue (TTM)$2.1 billionNet Income (TTM)-$194.1 millionCompany SnapshotUltra Clean Holdings provides essential subsystems, precision components, ultra-high purity cleaning services, and analytical verification solutions to the global semiconductor industry, with a comprehensive product portfolio including ultra-clean valves, high-purity connectors, pneumatic actuators, manifolds, and safety solutions.The company generates revenue through the design, manufacturing, and distribution of specialized semiconductor equipment and components, as well as through provision of critical cleaning and analytical services that support semiconductor fabrication and advanced manufacturing processes.Ultra Clean Holdings primarily serves semiconductor manufacturers and equipment suppliers globally, with a strong presence across the United States and international markets, positioning itself as a critical supplier to the semiconductor supply chain.Ultra Clean Holdings operates as a specialized supplier to the semiconductor industry with approximately 6,773 employees and a market capitalization of $4.1 billion. The company has demonstrated significant market momentum, with a one-year share price appreciation of 326.43%, reflecting strong investor confidence in its strategic positioning within the semiconductor equipment and services sector. Despite near-term profitability challenges reflected in a TTM net loss of $194.1 million, the company's substantial revenue base of $2.1 billion underscores its established market presence and critical role in supporting semiconductor manufacturing operations.

What this transaction means for investorsThe timing of this sale seems like some very well-timed housekeeping. Of course, as noted, Harding set the plan four months back, but he sold at $128.75 just as the stock began a steep slide, and within days shares had tumbled to the low $90s. Still, at roughly $494,000, this is still a small sale that leaves him with 33,581 shares worth around $3.5 million at recent prices, so this is a trim, not a retreat. Plus, he’s been selling consistently every month at around the same time. Worth noting is that other insiders, including the CFO, have also sold shares in recent weeks.

Meanwhile, the business is mid-turnaround. First-quarter revenue reached $533.7 million, and the company posted a non-GAAP profit of $0.31 a share even while absorbing a GAAP loss, with management leaning on its Vision 2030 targets and an AI-driven equipment cycle. For long-term investors, watch whether the AI spending wave holds, and whether insider selling stays a trickle or turns into a trend.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Key Takeaways UCTT is benefiting from AI-driven WFE spending across logic, memory and advanced packaging.UCTT's footprint supports nearly $3B in annual revenue and can scale to $4B with modest capital.UCTT's UCT 3.0 strategy expands engineering reach and aligns with customer technology roadmaps. Ultra Clean Holdings (UCTT - Free Report) appears well-positioned to benefit from rising wafer fabrication equipment (WFE) spending as AI-driven semiconductor investments continue to accelerate. UCTT supplies critical subsystems, gas and chemical delivery systems, process modules and ultra-high purity cleaning services that support semiconductor manufacturing, providing broad exposure to expanding AI infrastructure buildouts.

The strongest opportunity stems from rising investments in leading-edge foundry logic, high-bandwidth memory and advanced packaging as hyperscalers expand AI data center capacity. Increasing process complexity is driving greater equipment intensity, particularly in deposition and etch applications, where UCTT has meaningful exposure through its precision subsystems and modules. Improving fab construction visibility and customer capacity planning continues to support expectations for a multiyear semiconductor investment cycle. Revenues increased 2.9% year over year to $533.7 million in the first quarter of 2026, supported by a favorable product mix and higher factory utilization.

Ultra Clean is strengthening its competitive position through its UCT 3.0 strategy, which emphasizes ramp readiness, regional engineering centers, digital transformation and faster new product introduction cycles aligned with customer technology roadmaps. Centres of excellence across the United States, Europe and Asia position engineering resources closer to customer operations, supporting future market share opportunities as WFE investment broadens beyond leading-edge logic into memory and advanced packaging. The global footprint supports nearly $3 billion in annual revenues and can scale to $4 billion with modest incremental capital investment, providing headroom for higher WFE-linked demand.

The Zacks Consensus Estimate for 2026 revenues is pegged at $2.53 billion, up 22.9% year over year, suggesting Ultra Clean should benefit from a prolonged AI-driven WFE upcycle.

UCTT Faces Stiff CompetitionUCTT faces competition from Ichor Holdings (ICHR - Free Report) and Entegris (ENTG - Free Report) , both direct beneficiaries of rising WFE spending. Ichor Holdings supplies fluid delivery subsystems used in semiconductor capital equipment, while Entegris provides advanced materials and contamination control solutions essential to wafer fabrication. As AI-driven WFE investments accelerate, both Ichor Holdings and Entegris are positioned to compete with UCTT across overlapping semiconductor manufacturing applications.

UCTT’s Price Performance, Valuation & EstimatesShares of UCTT have surged 258.4% in the year-to-date period against the Zacks Electronics - Manufacturing Machinery industry’s increase of 142%.

UCTT’s YTD Price Return Performance
Image Source: Zacks Investment Research

UCTT shares are trading at a forward 12-month price/sales of 1.42X compared with the broader Zacks Computer and Technolgy sector’s 6.97X.

UCTT’s Forward 12 Months (P/S) Valuation
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Ultra Clean’s 2026 EPS is pegged at $2.46 per share, up 11 cents over the past 30 days, indicating year-over-year growth of 134.3%.

Currently, Ultra Clean sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

, /PRNewswire/ -- Ultra Clean Holdings, Inc. (Nasdaq: UCTT), today announced the Company will release its second quarter 2026 financial results on Monday, August 3, 2026, after market close and will host a conference call and webcast the same day.

The call will take place at 1:45 p.m. PT and can be accessed by dialing 1-800-836-8184 or 1-646-357-8785. No passcode is required. A replay of the call will be available by dialing 1-888-660-6345 or 1-646-517-4150 and entering the confirmation code 68934#.

The Webcast will be available on the Investor Relations section of the Company's website at http://uct.com/investors/events/.  

About Ultra Clean Holdings, Inc.

Ultra Clean Holdings, Inc. is a leading developer and supplier of critical subsystems, components, parts, and ultra-high purity cleaning and analytical services, primarily for the semiconductor industry. Under its Products division, UCT offers its customers an integrated outsourced solution for major subassemblies, improved design-to-delivery cycle times, design for manufacturability, prototyping, and high-precision manufacturing. Under its Services Division, UCT offers its customers tool chamber parts cleaning and coating, as well as micro-contamination analytical services. Ultra Clean is headquartered in Hayward, California. Additional information is available at www.uct.com.

Contact:

Rhonda Bennetto
SVP Investor Relations
[email protected]

SOURCE Ultra Clean Holdings, Inc.

For Immediate ReleaseChicago, IL – June 26, 2026 – Today, Zacks Equity Research Kulicke and Soffa Industries (KLIC - Free Report) , Ultra Clean Holdings (UCTT - Free Report) and Veeco Instruments (VECO - Free Report) .

Industry: Electronics Components

Link: https://www.zacks.com/commentary/2942715/3-stocks-to-buy-from-the-prospering-electronics-manufacturing-industry

The Zacks Electronics - Manufacturing Machinery industry players like Kulicke and Soffa Industries, Ultra Clean Holdings and Veeco Instruments are benefiting from massive investment in AI infrastructure. Hyperscalers and cloud providers are expanding data center capacity, driving demand for leading-edge logic chips, high-bandwidth memory (HBM), advanced packaging and optical networking solutions.

As AI processors become more complex, advanced packaging technologies have become a major investment area. More advanced process technologies, heterogeneous integration, higher process intensity and sophisticated packaging require additional deposition, etch, annealing, bonding and metrology equipment. Strong growth in memory equipment demand bodes well for industry players.

Industry DescriptionThe Zacks Electronics - Manufacturing Machinery industry comprises companies that provide a range of solutions to address the needs of wafer processing facilities, as well as device packaging and test facilities, and semiconductor manufacturing processes. The solutions offered by the industry participants include thin-film processing systems, photonics, process-control tools (that perform macro defect inspections and metrology), metal-organic chemical vapor deposition, advanced packaging lithography, wet etch and clean, laser annealing, and 3D wafer inspection systems.

A few industry participants also offer micro-contamination control products and advanced material-handling solutions. Contamination-free transportation, storage and delivery of materials have gained immense significance in recent times.

3 Trends Shaping the Future of the Electronics IndustryMiniaturization Enhances Prospects: Industry participants are benefiting from the ongoing transition in semiconductor manufacturing technology. The demand for advanced packaging, which enables the miniaturization of electronic products, remains strong. The consistent shift to smaller dimensions, increasing complexity in transistor design and the rapid adoption of new device architectures, such as FinFET, 3D NAND and GAA, along with the increasing utilization of new manufacturing materials to increase transistor and bit density, are driving the demand for solutions provided by the industry players.

Moreover, the emergence of techniques like wafer-level packaging is driving the need for a high-purity manufacturing environment free of contaminants. The rising demand for clean processing, as well as wafer carrier cleaning and conditioning tools, is a key catalyst for industry participants.

Complex Process Driving Demand: The requirement for faster, more powerful, compact and energy-efficient semiconductors is expected to increase rapidly with emerging applications, including AI, high-performance and cloud computing, smartphones, wearable technology, self-driving vehicles, the Internet of Things (IoT), gaming and virtual reality, and smart healthcare.

Semiconductor manufacturers like Intel, Samsung and Taiwan Semiconductors are primarily looking to maximize manufacturing yields at lower costs. This is making semiconductor manufacturing processes more complex and driving the demand for solutions offered by industry participants. The rapid adoption of IoT-supported factory automation solutions is another contributing factor. The increasing deployment of 5G and the growing demand for edge computing are other key catalysts.

DRAM & HBM Demand Strong: Memory has shifted from being a bottleneck to a major investment opportunity. Memory manufacturers are expanding both greenfield fabs and existing facilities to increase AI server capacity. HBM is emerging as one of the strongest secular growth drivers due to its critical role in AI accelerators and high-performance computing.

As GPUs become more powerful, memory bandwidth has become a key bottleneck, prompting memory manufacturers to aggressively expand HBM capacity. The broader DRAM market is also poised for sustained growth as AI applications require significantly larger memory capacity.

Zacks Industry Rank Indicates Bullish ProspectsThe Zacks Electronics - Manufacturing Machinery industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #4, which places it in the top 2% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bullish near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

The industry’s position in the top 50% of the Zacks-ranked industries is a result of the positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, analysts appear optimistic about this group’s earnings growth potential. Since Jan. 31, 2026, the industry’s earnings estimates for 2026 have increased 48%.

Given the positive industry outlook, there are a number of stocks worth buying. However, before we present the stocks you may want to consider for your portfolio, let us take a look at the industry’s recent stock-market performance and valuation picture.

Industry Beats Sector & S&P 500The Zacks Electronics - Manufacturing Machinery industry has outperformed the broader Zacks Computer and Technology sector and the S&P 500 over the past year.

The industry has jumped 233.1% over this period compared with the S&P 500’s return of 23.4% and the broader sector’s appreciation of 37.1%.

Industry's Current ValuationOn the basis of the trailing 12-month EV/EBITDA ratio, which is a commonly used multiple for valuing Electronics - Manufacturing Machinery companies, we see that the industry is trading at 42.52X compared with the S&P 500’s 18.23X. The industry is trading above the sector’s trailing 12-month EV/EBITDA of 19.7X.

Over the last five years, the industry has traded as high as 44.67X and as low as 4.03X, with the median being 12.7X.

3 Electronics Stocks to Buy Right NowKulicke and Soffa: This Zacks Rank #1 (Strong Buy) is riding on strong demand for Thermo-Compression Bonding (TCB). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kulicke and Soffa expects TCB revenues to exceed $100 million in fiscal 2026. The company is expanding production capacity to support approximately $400 million in Advanced Solutions revenue, positioning KLIC to capitalize on the AI packaging cycle.

An expanding portfolio bodes well for Kulicke and Soffa’s prospects. Introduction of new solutions, including the Asterion-TW power semiconductor platform, ProMEM memory suite and advanced dispense products, is noteworthy. KLIC is increasing investments in hybrid bonding and panel-level packaging. These initiatives position the company to capture future demand across HBM, DRAM, power semiconductors and next-generation heterogeneous integration.

The Zacks Consensus Estimate for Kulicke and Soffa Industries’ fiscal 2026 earnings has been unchanged at $3.34 per share over the past 30 days. Shares have jumped 170.6% year to date.

Ultra Clean Holdings: This Zacks Rank #1 company believes the semiconductor industry is in the early stages of a multiyear AI-driven expansion, supported by hyperscaler investments, leading-edge foundry logic, HBM and advanced packaging demand. UCTT expects momentum to strengthen through the second half of 2026 and into 2027 as customers increase wafer fab equipment spending and fab utilization.

Ultra Clean’s existing manufacturing network supports approximately $3 billion in annual revenues and can scale to roughly $4 billion with only modest incremental capital investment. As volumes rise, UCTT expects higher factory utilization, better operating leverage and continued margin expansion, supported by its UCT 3.0 operational strategy and digital transformation initiatives.

The Zacks Consensus Estimate for Ultra Clean Holdings’ 2026 earnings has climbed 4.7% to $2.46 per share over the past 30 days. Shares have skyrocketed 328.1% on a year-to-date basis.

Veeco: This Zacks Rank #1 company continues to benefit from strong demand in advanced packaging, logic, memory and silicon photonics, with management highlighting sustained order momentum and increasing visibility into 2027. Veeco expects AI infrastructure investments to drive durable multiyear growth across its semiconductor portfolio.

Veeco secured more than $250 million in orders for MOCVD, wet processing and Ion Beam Deposition systems supporting indium phosphide laser manufacturing for AI data centers. Deliveries begin in 2026 and accelerate significantly in 2027, reinforcing the company's leadership in optical networking technologies as data centers transition from copper interconnects to optics.

The company is increasing manufacturing capacity for Advanced Packaging and Ion Beam Deposition systems while continuing to expand opportunities in HBM, EUV mask blanks, GaN power devices and advanced annealing. Veeco expects these technologies to drive meaningful market expansion through 2030, providing multiple long-term growth drivers beyond the current AI cycle.

The Zacks Consensus Estimate for Veeco’s 2026 earnings has been steady at $1.65 per share over the past 30 days. Shares have appreciated 149% year to date.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance  for information about the performance numbers displayed in this press release.

Momentum investing revolves around the idea of following a stock's recent trend in either direction. In "long context," investors will be essentially be "buying high, but hoping to sell even higher." With this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving that way. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.

While many investors like to look for momentum in stocks, this can be very tough to define. There is a lot of debate surrounding which metrics are the best to focus on and which are poor quality indicators of future performance. The Zacks Momentum Style Score, part of the Zacks Style Scores, helps address this issue for us.

Below, we take a look at Ultra Clean Holdings (UCTT - Free Report) , which currently has a Momentum Style Score of B. We also discuss some of the main drivers of the Momentum Style Score, like price change and earnings estimate revisions.

It's also important to note that Style Scores work as a complement to the Zacks Rank, our stock rating system that has an impressive track record of outperformance. Ultra Clean Holdings currently has a Zacks Rank of #1 (Strong Buy). Our research shows that stocks rated Zacks Rank #1 (Strong Buy) and #2 (Buy) and Style Scores of "A or B" outperform the market over the following one-month period.

You can see the current list of Zacks #1 Rank Stocks here >>>

Set to Beat the Market? In order to see if UCTT is a promising momentum pick, let's examine some Momentum Style elements to see if this chipmaking equipment services company holds up.

A good momentum benchmark for a stock is to look at its short-term price activity, as this can reflect both current interest and if buyers or sellers currently have the upper hand. It's also helpful to compare a security to its industry; this can show investors the best companies in a particular area.

For UCTT, shares are up 11.37% over the past week while the Zacks Electronics - Manufacturing Machinery industry is up 4.59% over the same time period. Shares are looking quite well from a longer time frame too, as the monthly price change of 44.36% compares favorably with the industry's 19.49% performance as well.

While any stock can see a spike in price, it takes a real winner to consistently outperform the market. Shares of Ultra Clean Holdings have increased 106.01% over the past quarter, and have gained 507.92% in the last year. In comparison, the S&P 500 has only moved 13.8% and 26.67%, respectively.

Investors should also pay attention to UCTT's average 20-day trading volume. Volume is a useful item in many ways, and the 20-day average establishes a good price-to-volume baseline; a rising stock with above average volume is generally a bullish sign, whereas a declining stock on above average volume is typically bearish. UCTT is currently averaging 1,190,992 shares for the last 20 days.

Earnings OutlookThe Zacks Momentum Style Score also takes into account trends in estimate revisions, in addition to price changes. Please note that estimate revision trends remain at the core of Zacks Rank as well. A nice path here can help show promise, and we have recently been seeing that with UCTT.

Over the past two months, 1 earnings estimate moved higher compared to none lower for the full year. This revision helped boost UCTT's consensus estimate, increasing from $1.90 to $2.46 in the past 60 days. Looking at the next fiscal year, 1 estimate has moved upwards while there have been no downward revisions in the same time period.

Bottom LineTaking into account all of these elements, it should come as no surprise that UCTT is a #1 (Strong Buy) stock with a Momentum Score of B. If you've been searching for a fresh pick that's set to rise in the near-term, make sure to keep Ultra Clean Holdings on your short list.

Investors in the semiconductor capital equipment sector often face a structural question about where value is created in the supply chain. The largest equipment manufacturers—companies such as Applied Materials (NASDAQ:AMAT | AMAT Price Prediction) and Lam Research (NYSE:LRCX)—design and sell complete semiconductor manufacturing systems. Surrounding these firms is a large ecosystem of suppliers that provide subsystems, fluid delivery systems, precision components, robotics, and process control technologies that are integrated into those systems.

Because these suppliers participate directly in the manufacturing tools sold by the equipment companies, their revenue growth is closely tied to wafer fabrication equipment (WFE) spending cycles. This relationship has drawn renewed attention following recent earnings reports and analyst upgrades across several supply chain companies.

For example, following its fiscal fourth-quarter earnings beat, Needham raised its price target on Ultra Clean Holdings (NASDAQ:UCTT) to $70 from $50 on February 24 while maintaining a Buy rating. The firm cited improving customer forecasts and expectations for 15%–20% growth in wafer fabrication equipment spending, with a step-function increase anticipated later in the year. TD Cowen also raised its price target on UCTT to $70 from $35 while maintaining a Buy rating and highlighting strengthening demand expectations for leading-edge logic and DRAM, particularly high-bandwidth memory (HBM), which benefits deposition, etch, and CMP equipment suppliers. On the same day, Oppenheimer reiterated its Outperform rating on UCTT and raised its price target, citing strong guidance and a 2026 revenue growth outlook of roughly 15%–20%.

Such upgrades reinforce the view that subsystem suppliers tied to leading-edge semiconductor manufacturing are positioned to benefit from the next capital spending cycle in wafer fabrication equipment.

Yet the critical investment question remains unresolved. While suppliers participate in the growth of semiconductor capital spending, the equipment manufacturers themselves control the system architecture, the customer relationship with semiconductor fabs, and the majority of system-level revenue. Historically, this structural position has allowed equipment companies to capture a larger share of the value created during semiconductor capital spending cycles.

This article therefore examines a fundamental investment question within the semiconductor equipment ecosystem: is it better to invest in the equipment manufacturers themselves—Applied Materials and Lam Research—or in key suppliers within their supply chains such as MKS Instruments (NASDAQ:MKSI), Ultra Clean Holdings (UCTT), and Ichor Holdings (NASDAQ:ICHR)?

Pros and Cons of Investing in Smaller Supply Chain Companies

Supply chain companies are typically smaller than their major customers and can therefore offer potentially higher growth rates. Their products are often highly specialized and tightly integrated into the design of semiconductor manufacturing equipment. These relationships can create long-term customer partnerships and recurring revenue streams.

Subsystem suppliers also frequently possess niche technological expertise that makes them difficult to replace once their components are designed into a semiconductor tool platform. This dynamic can provide stable revenue opportunities during industry upcycles.

MKS Instruments differs somewhat from Ichor and Ultra Clean in that it serves multiple end markets including industrial, photonics, and life sciences applications. This diversification reduces reliance on semiconductor capital spending and can partially offset cyclicality in the semiconductor equipment sector.

However, investing in smaller supply chain companies carries significant risks. These firms are often heavily dependent on a small number of customers. If those customers experience order declines or adjust production schedules, the impact on supplier revenue can be immediate and severe.

Smaller companies also tend to have fewer financial resources and less pricing power than their larger customers. During semiconductor industry downturns, subsystem suppliers often experience sharper revenue contractions and more volatile earnings than the equipment manufacturers themselves.

Analysis of Applied Materials and Lam Research

Applied Materials and Lam Research are among the largest semiconductor equipment manufacturers in the world. According to Chart 1, which shows 2025 semiconductor equipment market share and is derived from my report entitled “Global Semiconductor Equipment: Markets, Market Share, Market Forecasts“, Applied Materials ranked second globally with approximately 18% market share while Lam Research ranked third with roughly 11% share.

Chart 1. Global Semiconductor Equipment Suppliers Top 10 2025

The scale of these market shares reflects not only the strength of the equipment companies themselves but also the extensive network of suppliers that provide the subsystems and components integrated into each tool platform.

These companies assemble complex semiconductor manufacturing systems using thousands of parts sourced from suppliers around the world. Subsystem providers supply critical technologies ranging from gas delivery systems and vacuum components to robotics, motion control systems, and precision machined parts.

According to Table 1, the diversity of suppliers supporting Applied Materials reflects the global nature of the semiconductor equipment supply chain.

 Sales Analysis of Suppliers to Applied Materials and Lam Research Subsystem suppliers generate significant revenue from their largest customers, reflecting the highly integrated nature of semiconductor equipment manufacturing. Companies such as Ichor Holdings, Ultra Clean Holdings, and MKS Instruments provide subsystems that are designed directly into the equipment platforms of Applied Materials and Lam Research.

According to Table 2, revenue derived from these two equipment manufacturers represents a substantial portion of total sales for these suppliers. The table illustrates how dependent subsystem suppliers can be on a small number of equipment companies, which exposes them to fluctuations in tool demand but also allows them to benefit directly when equipment build rates increase during semiconductor capital spending upcycles.

The data illustrate the concentration risk inherent in the semiconductor equipment supply chain. While subsystem suppliers participate directly in equipment growth cycles, their revenues remain closely tied to the order patterns of a limited number of customers. When tool shipments rise, suppliers benefit from higher subsystem demand, but when capital spending slows, revenue declines can occur rapidly because of the limited diversification of their customer base.

Structural Value Capture in the Semiconductor Equipment Supply Chain The structural position of semiconductor equipment manufacturers within the value chain helps explain why they have historically delivered stronger financial performance than many of their subsystem suppliers. Equipment companies such as Applied Materials and Lam Research sell complete manufacturing systems directly to semiconductor fabs, often with average selling prices ranging from several million dollars to well over $100 million for advanced process tools.

Subsystem suppliers, by contrast, typically provide specialized components that represent only a fraction of the total system value. Fluid delivery systems, vacuum components, robotics, gas panels, and other subsystems are essential to tool performance, but they account for a relatively small portion of the final system price. As a result, suppliers generally operate with lower margins and have limited pricing leverage compared with the equipment manufacturers that control the overall system design.

Another important structural difference is the ownership of the customer relationship. Semiconductor manufacturers purchase equipment systems directly from companies such as Applied Materials and Lam Research, which maintain long-term service contracts and process integration partnerships with their customers. Subsystem suppliers, however, typically sell to the equipment companies rather than directly to the semiconductor fabs.

These structural dynamics help explain why the largest semiconductor equipment manufacturers often capture a disproportionate share of the financial returns generated during semiconductor industry upcycles.

According to Chart 2, share price performance over the past year reflects the strong recovery in semiconductor capital spending following the 2023 downturn. Lam Research and Applied Materials both benefited from accelerating demand for deposition and etch equipment tied to advanced logic, memory, and AI-related infrastructure. Suppliers such as MKS Instruments and Ultra Clean Holdings also participated in this recovery as tool build rates increased across major equipment manufacturers. However, the magnitude of performance across the group varies significantly, illustrating the differing levels of operating leverage and market exposure among the equipment companies and their subsystem suppliers.

AMAT data by YCharts

Chart 2. Share Price Performance – 6 Months

According to Chart 3, the longer three-year performance horizon provides a clearer view of how value has been captured across the semiconductor equipment supply chain. Over this period, the largest equipment manufacturers have generally outperformed their suppliers, reflecting their control of the system architecture, customer relationships with semiconductor manufacturers, and a larger share of the total system revenue. Subsystem suppliers such as Ichor Holdings and Ultra Clean Holdings remain highly leveraged to equipment demand, but their financial performance is more sensitive to cyclical fluctuations in tool shipments and customer concentration.

AMAT data by YCharts

Chart 3. Share Price Performance – 3 Years

Over a longer three-year period the performance divergence becomes more apparent, with the largest equipment manufacturers generally outperforming their suppliers.

Investor Takeaway The semiconductor equipment ecosystem illustrates a classic supply-chain investment dilemma. Suppliers participate in the growth of semiconductor capital spending and can experience significant revenue expansion during industry upcycles. However, the equipment manufacturers themselves control system architecture, customer relationships, and the majority of system-level revenue.

The historical share-price performance presented in this article suggests that the equipment manufacturers have captured a larger portion of the value created during semiconductor capital spending cycles.

While companies such as MKS Instruments, Ultra Clean Holdings, and Ichor Holdings remain important participants in the semiconductor manufacturing ecosystem, investors seeking exposure to long-term growth in wafer fabrication equipment spending may find that the system manufacturers—Applied Materials and Lam Research—have historically provided more consistent returns.

Sheri Savage, Chief Financial Officer of Ultra Clean Holdings (UCTT +3.88%), reported the sale of 14,421 directly-held common shares in multiple open-market transactions on June 4, 2026, according to a SEC Form 4 filing.

Transaction summaryMetricValueShares sold (direct)14,421Transaction value$1.3 millionPost-transaction shares (direct)66,476Post-transaction value (direct ownership)~$6.23 millionTransaction value based on SEC Form 4 weighted average reported price ($89.45); post-transaction value based on June 4, 2026 market close ($93.69).

Key questionsHow material was the sale relative to Savage's historical trading patterns?
This transaction's size (14,421 shares) is in line with the mean for Savage's previous open-market sales (~11,885 shares) and falls within the historical range of 3,337 to 18,027 shares reported since March 2024.What proportion of Savage's direct holdings was sold, and what capacity remains?
The sale accounted for 17.83% of her direct ownership, leaving 66,476 shares post-transaction, or approximately 48% of her position from March 2024, reflecting a measured reduction in line with declining available capacity.Were any derivative securities or indirect entities involved in the transaction?
No options were exercised or indirect holdings transacted; all shares sold were held directly, and Savage reported no post-sale indirect or derivative ownership.How does the sale price compare to prevailing market levels and performance?
The weighted average sale price of around $89.45 per share was below the June 4, 2026 closing price of $93.69 and the price of $108.90 as of June 12, 2026, with the stock up 345.3% year-over-year at the sale date.Company overviewMetricValuePrice (as of market close June 4, 2026)$93.69Market capitalization$4.88 billionRevenue (TTM)$2.07 billion1-year price change345.3%* 1-year performance calculated using June 4, 2026 as the reference date.

Company snapshotUltra Clean Holdings provides ultra-high purity subsystems, precision components, industrial automation equipment, and advanced cleaning and analytical verification services, primarily for the semiconductor manufacturing industry.The company generates revenue by manufacturing and delivering critical subsystems and process modules for semiconductor capital equipment, as well as by offering specialized cleaning and contamination analysis services.Its principal customers are original equipment manufacturers (OEMs) in the semiconductor sector, as well as integrated device manufacturers and clients in adjacent industries such as display, medical, energy, and research equipment.Ultra Clean Holdings operates at scale with over 6,700 employees and a global presence, supporting the semiconductor industry's demand for high-purity process solutions and contamination control.

The company differentiates itself through its comprehensive portfolio of precision-engineered products and mission-critical services, enabling semiconductor OEMs to maintain high yields and operational reliability. Its integrated offering and technical expertise position it as a key supplier within the semiconductor manufacturing value chain.

What this transaction means for investorsThe June 4 sale of Ultra Clean stock by company CFO Sheri Savage came at a time when shares were skyrocketing. Last June, the stock hit a 52-week low of $19.51. This June, it reached a high of $110.25. Given the dramatic turnaround in share price, it’s understandable Savage would sell at this time.

However, the disposition isn’t necessarily a cause for investor concern. Sheri Savage announced her intention to retire from the company in April. Moreover, after her sale, she retained over 66,000 shares, indicating she still maintains sizable equity in Ultra Clean Holdings.

The stock has soared thanks to artificial intelligence. The AI market is dependent on semiconductors, and as a result, customer demand has increased for Ultra Clean’s services.

The company reported revenue of $533.7 million in its fiscal first quarter ended March 27, up from the prior year’s $518.6 million. It anticipates sales to accelerate in its fiscal Q2 to a range of $565 million to $605 million, which helped to propel its stock upwards.

Robert Izquierdo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Ultra Clean Holdings, Inc. (UCTT) Q1 2026 Earnings Call Transcript

Shares of Ultra Clean Holdings (UCTT - Free Report) have gained 18.1% over the past four weeks to close the last trading session at $74.61, but there could still be a solid upside left in the stock if short-term price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $98 indicates a potential upside of 31.4%.

The mean estimate comprises four short-term price targets with a standard deviation of $4. While the lowest estimate of $92.00 indicates a 23.3% increase from the current price level, the most optimistic analyst expects the stock to surge 34% to reach $100.00. It's very important to note the standard deviation here, as it helps understand the variability of the estimates. The smaller the standard deviation, the greater the agreement among analysts.

While the consensus price target is a much-coveted metric for investors, solely banking on this metric to make an investment decision may not be wise at all. That's because the ability and unbiasedness of analysts in setting price targets have long been questionable.

However, an impressive consensus price target is not the only factor that indicates a potential upside in UCTT. This view is strengthened by the agreement among analysts that the company will report better earnings than what they estimated earlier. Though a positive trend in earnings estimate revisions doesn't give any idea as to how much the stock could surge, it has proven effective in predicting an upside.

Price, Consensus and EPS Surprise

Here's What You May Not Know About Analysts' Price TargetsAccording to researchers at several universities across the globe, a price target is one of many pieces of information about a stock that misleads investors far more often than it guides. In fact, empirical research shows that price targets set by several analysts, irrespective of the extent of agreement, rarely indicate where the price of a stock could actually be heading.

While Wall Street analysts have deep knowledge of a company's fundamentals and the sensitivity of its business to economic and industry issues, many of them tend to set overly optimistic price targets. Are you wondering why?

They usually do that to drum up interest in shares of companies that their firms either have existing business relationships with or are looking to be associated with. In other words, business incentives of firms covering a stock often result in inflated price targets set by analysts.

However, a tight clustering of price targets, which is represented by a low standard deviation, indicates that analysts have a high degree of agreement about the direction and magnitude of a stock's price movement. While that doesn't necessarily mean the stock will hit the average price target, it could be a good starting point for further research aimed at identifying the potential fundamental driving forces.

That said, while investors should not entirely ignore price targets, making an investment decision solely based on them could lead to disappointing ROI. So, price targets should always be treated with a high degree of skepticism.

Why UCTT Could Witness a Solid UpsideAnalysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason to expect an upside in the stock. That's because empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

The Zacks Consensus Estimate for the current year has increased 29.9% over the past month, as one estimate has gone higher compared to no negative revision.

Moreover, UCTT currently has a Zacks Rank #1 (Strong Buy), which means it is in the top 5% of more than 4,000 stocks that we rank based on four factors related to earnings estimates. Given an impressive externally-audited track record, this is a more conclusive indication of the stock's potential upside in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .

Therefore, while the consensus price target may not be a reliable indicator of how much UCTT could gain, the direction of price movement it implies does appear to be a good guide.

Ultra Clean Holdings (UCTT - Free Report) could be a solid addition to your portfolio given a notable revision in the company's earnings estimates. While the stock has been gaining lately, the trend might continue since its earnings outlook is still improving.

Analysts' growing optimism on the earnings prospects of this chipmaking equipment services company is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- is principally built on this insight.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

For Ultra Clean Holdings, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.

The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate RevisionsThe company is expected to earn $0.53 per share for the current quarter, which represents a year-over-year change of +96.3%.

Over the last 30 days, the Zacks Consensus Estimate for Ultra Clean has increased 60.71% because one estimate has moved higher compared to no negative revisions.

Current-Year Estimate RevisionsFor the full year, the company is expected to earn $2.35 per share, representing a year-over-year change of +123.8%.

The revisions trend for the current year also appears quite promising for Ultra Clean, with one estimate moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 29.94%.

Favorable Zacks RankThe promising estimate revisions have helped Ultra Clean earn a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision.

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

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom LineUltra Clean shares have added 15.5% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects.

Leading contributors in the First Eagle Small Cap Opportunity Fund this quarter included Ultra Clean Holdings, Oil States International, Lincoln Educational Services, Advanced Energy and FormFactor. Oil States International shares rallied on very strong bookings during the quarter and improved operator-powered solutions and services inside the wellbore. The leading detractors in the quarter were Vital Farms, Alphatec Holdings, Beta Bionics, SI-BONE. and Herc Holdings.

Here are three stocks with buy rank and strong momentum characteristics for investors to consider today, May 20:

Lumentum Holdings Inc. (LITE - Free Report) : This photonics company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 6.5% over the last 60 days.

Lumentum's shares gained 33.3% over the last three months compared with the S&P 500’s decline of 7.5%. The company possesses a Momentum Score of A.

Ultra Clean Holdings, Inc. (UCTT - Free Report) : Thissemiconductor equipment and services company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 23.7% over the last 60 days.

Ultra Clean’s shares gained 30.2% over the last three months compared with the S&P 500’s decline of 7.5%. The company possesses a Momentum Score of A.

Applied Materials, Inc. (AMAT - Free Report) : This semiconductor materials engineering company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 5.8% over the last 60 days.

Applied’s shares gained 8.4% over the last three months compared with the S&P 500’s decline of 7.5%. The company possesses a Momentum Score of B.

See the full list of top ranked stocks here

Learn more about the Momentum score and how it is calculated here.

Key Takeaways UCTT shares surged 321.5% in a year, beating the industry's 210.6% gain.AI-led demand for advanced chips is boosting WFE needs, lifting subsystem content per tool.Global fab buildouts plus Products and recurring Services revenue support long-term demand tailwinds. Ultra Clean Holdings, Inc. (UCTT - Free Report) has surged a stellar 321.5% in the past year compared with the industry’s growth of 210.6%. It has outperformed peers like Veeco Instruments Inc. (VECO - Free Report) and Kulicke and Soffa Industries, Inc. (KLIC - Free Report) . While Veeco has gained 210.2%, KLIC jumped 227.3% over this period.

Ultra Clean is well-positioned to capitalize on the next wave of semiconductor industry growth, fueled by robust artificial intelligence (AI) spending, advanced chip manufacturing and expanding global fab investments. The company operates as a critical supplier to the semiconductor equipment industry, providing high-purity subsystems, precision components and contamination-control services used in wafer fabrication processes. As chipmakers ramp investments in advanced nodes and AI infrastructure, Ultra Clean stands to benefit from rising wafer fabrication equipment (WFE) demand.

One-Year Stock Price Performance of UCTT

Image Source: Zacks Investment Research

AI Spending Emerging as Major Growth CatalystThe rapid adoption of generative AI applications is driving unprecedented demand for high-performance computing chips, GPUs and advanced memory solutions. This trend has triggered aggressive capital spending by semiconductor manufacturers to expand leading-edge production capacity.

Ultra Clean’s products are embedded in semiconductor manufacturing equipment used for advanced logic and memory production. Increasing complexity at 3nm and 2nm nodes is driving higher subsystem content per tool, creating favorable growth opportunities for the company. It is also benefiting from growing investments in advanced packaging and high-bandwidth memory technologies, both of which are essential for AI workloads.

Strong Exposure to Long-Term Semiconductor TrendsUltra Clean remains strategically aligned with several secular semiconductor growth drivers, including AI and data center expansion, advanced node transitions, advanced packaging adoption and rising semiconductor equipment intensity.

The company’s dual business model further strengthens its growth profile. While its Products segment supplies critical subsystems and assemblies to semiconductor OEMs, its Services segment generates recurring revenue through ultra-high purity cleaning and contamination-control solutions for semiconductor fabs.

As semiconductor manufacturing processes become increasingly sophisticated, demand for precision-engineered components and contamination management solutions continues to rise.

Global Fab Expansion Supporting DemandGovernments and semiconductor companies worldwide continue investing heavily in domestic chip manufacturing capabilities. The U.S. CHIPS Act and similar initiatives across Asia and Europe are driving a multi-year fab expansion cycle. Ultra Clean has built a broad global manufacturing and service footprint across North America, Asia and Europe, enabling it to support customers near key semiconductor production hubs. This geographic diversification not only improves operational flexibility but also positions the company to benefit from regional supply chain localization initiatives.

Strategic Buyouts Enhance CapabilitiesUltra Clean has consistently expanded its technological and operational capabilities through acquisitions. The buyouts have broadened its addressable market while enhancing its ability to serve increasingly complex semiconductor manufacturing requirements. Management also continues to evaluate strategic opportunities aimed at expanding technology offerings and improving long-term profitability.

The company is focused on operational improvements to drive margin expansion. It has implemented several efficiency initiatives, including facility optimization, organizational streamlining and enterprise system upgrades. Management’s long-term “UCT 3.0” strategy targets higher revenue growth and improved profitability through manufacturing optimization, service expansion and increased penetration of higher-value semiconductor applications.

Moving ForwardUltra Clean appears well-positioned to benefit from favorable semiconductor industry fundamentals. Strong AI-driven demand, expanding global semiconductor investments, advanced packaging growth and rising equipment complexity are expected to serve as key long-term growth drivers.

While semiconductor spending remains cyclical, Ultra Clean’s expanding role in precision subsystems, contamination-control solutions and fab services strengthens its long-term growth outlook. Investors, therefore, are likely to benefit if they invest in this high-flying Zacks Rank #1 (Strong Buy) stock now. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ultra Clean (UCTT) saw its shares surge in the last session with trading volume being higher than average. The latest trend in earnings estimate revisions may not translate into further price increase in the near term.