Veeco Instruments Inc

Axcelis Technologies reported second-quarter revenue of $215.2 million and non-GAAP diluted earnings per share of $1.06, both above company forecasts, and raised its full-year 2026 revenue growth outlook to approximately mid-single digits from a prior expectation of flat performance. Systems revenue was $132 million, supported by recovery in power markets and general mature node activity, while CS&I revenue grew sequentially to $83 million on higher customer utilization. Bookings were $131 million with a book-to-bill ratio of approximately 1x over the past three quarters, and backlog stood at $452 million. The company guided third-quarter revenue of approximately $230 million and non-GAAP diluted EPS of $1.11, and expects the pending merger with Veeco Instruments to close in the second half of 2026.

Veeco Instruments updated its full-year 2026 revenue guidance to a range of $780 million to $810 million and announced plans to more than double its capacity in advanced packaging and silicon photonics during 2027. CEO William Miller said the company sees an important inflection point driven by AI investments, with order momentum accelerating across all major end markets, including $200 million in advanced packaging orders for wet processing and lithography systems that strengthen visibility into 2027. CFO John Kiernan reported second-quarter revenue of $193 million and non-GAAP diluted earnings per share of $0.33, with semiconductor revenue reaching $131 million, an increase of 20% from the prior quarter. The company expects the capacity expansion to pressure near-term profitability, with approximately $10 million in incremental operating expenses and a roughly 75-basis-point impact on full-year gross margin. Veeco also provided third-quarter revenue guidance of $200 million to $220 million and non-GAAP diluted EPS of $0.35 to $0.49, while noting that the pending merger with Axcelis has secured all regulatory clearances except for China antitrust approval and remains on track to close in the second half of 2026.

The global chemical vapor deposition market is projected to grow from $42.33 billion in 2025 to $69.19 billion by 2030, at a compound annual growth rate of 10.2%. The market is expected to reach $46.93 billion in 2026, driven by semiconductor manufacturing expansion, increased thin-film coating usage, and rising solar energy investments. Key trends include growing adoption of plasma-enhanced CVD systems and atomic layer deposition techniques, with Asia-Pacific leading the market and North America poised as the fastest-growing region. Major players such as CVD Equipment Corporation, Tokyo Electron Limited, and Veeco Instruments are advancing the market through innovations like Kyocera's new CVD coating materials and strategic acquisitions including Veeco's purchase of Epiluvac AB for $30 million.

Small and mid-cap AI stocks have significantly outperformed large caps in the first half of 2026, with the Russell 2000 and S&P 600 up 20% and 21% respectively, compared to an 8.5% gain for the S&P 500. Five stocks that have more than doubled this year and hold favorable Zacks Ranks are Bandwidth, Arteris, Penguin Solutions, A10 Networks, and Veeco Instruments. Bandwidth, a Zacks Rank #1, operates a conversational AI platform and expects 18.3% revenue growth this year. Arteris, a Zacks Rank #2, provides system IP for AI and automotive chips and projects 34.4% revenue growth. Penguin Solutions, also a Zacks Rank #1, offers AI infrastructure solutions and anticipates 25% revenue growth next year. A10 Networks, a Zacks Rank #2, delivers application networking for AI data centers and expects 11.9% revenue growth. Veeco Instruments, a Zacks Rank #1, makes thin film process equipment for AI hardware and forecasts 20.2% revenue growth.

Axcelis Technologies' stock price has more than doubled year to date, driven by its role in ion-implantation equipment for AI chip fabrication. The company reported only 3% year-over-year revenue growth in Q1, but that was due to declining sales in Power and General Mature markets, while memory demand fueled strong sequential growth in its customer support and innovation segment. The upcoming merger with Veeco Instruments, whose stock has also more than doubled this year, is expected to close in the second half and could expand market share through complementary AI infrastructure equipment like laser annealing. With the memory industry remaining hot, as evidenced by Micron Technology's recent earnings, investors are anticipating that memory will become a larger share of Axcelis' revenue, potentially driving growth in 2027.

Zacks Equity Research highlights Kulicke and Soffa Industries, Ultra Clean Holdings, and Veeco Instruments as top picks in the electronics manufacturing machinery industry, driven by massive AI infrastructure investment. The industry has surged 233.1% over the past year, far outpacing the S&P 500's 23.4% return, and its earnings estimates for 2026 have risen 48% since January 31, 2026. Kulicke and Soffa expects thermo-compression bonding revenues to exceed $100 million in fiscal 2026 and is expanding capacity to support approximately $400 million in advanced solutions revenue. Ultra Clean believes the semiconductor industry is in the early stages of a multiyear AI-driven expansion, with its manufacturing network supporting roughly $3 billion in annual revenues and scalable to about $4 billion. Veeco secured more than $250 million in orders for systems supporting indium phosphide laser manufacturing for AI data centers, with deliveries beginning in 2026 and accelerating in 2027.