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(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — I’ll start with a chart that caught my eye showing two of the seven semiconductor companies on our Best Stocks in the Market list essentially being one big trade. You can see that Nvidia and Broadcom basically have an identical chart. These stocks are being walked up into their coming earnings reports, with NVDA posting on Aug. 27 and AVGO due out Sept. 4. Here’s year-to-date percentage gains. There’s very little daylight between how these stocks act day to day, week to week: President Donald Trump made it clear last week that the manufacturing of semiconductors on U.S. soil is a key priority of his administration with a new sweeping tariff of 100% (with exceptions) on chips coming from overseas. This new barrier is a double-edged sword for the semi capital equipment space. On one hand, there is risk of the implementation of these tariffs throwing global supply chains into chaos mode with delays, shortages and miscellaneous hiccups affecting the outlook for the companies in the middle of it all. On the other hand, this should strengthen the positions of the largest U.S. companies from a demand perspective. It’s nice to be one of the only games in town — pricing power would be an obvious benefit. Two of the largest largest chip equipment companies are on our Best Stocks list. KLA Corp , a company formerly known as KLA Tencorp, has been shocking Wall Street with explosive earnings reports lately, including a 60% increase in EPS with a 30% jump in revenue in the latest quarter. KLA is a $120 billion giant in the testing and control tools space, which becomes more vital than ever in the AI era. It dominates the wafer inspection and process-control tool business, a critical niche within semiconductor manufacturing. Lam Research is a $130 billion company that specializes in areas of the chip manufacturing process like etch tools that precisely remove material layers from a wafer as well as wet and plasma-based cleaning equipment to remove contaminants. All of this is required in order to boost yield during production. KLA and Lam are riding high during this cycle as they have become indispensable to the semi designers and manufacturers over the decades leading up to this moment. Both companies derive less than 10% of their revenue from North America, which means that Trump’s new tariffs represent both a challenge and a substantial opportunity as the domestic demand picture shifts into overdrive. Below, Sean will give you a look at the current state of the Best Stocks list and talk more in-depth about the semiconductor space. I’ll be back with some charts and trade ideas after. Sector Leaderboard As of Aug. 11, there are 161 names on The Best Stocks in the Market list. Top sector ranking: Top 5 Best Stocks by Relative Strength: Sean — We have seven semiconductor companies on our list (inclusive of semi equipment firms too), which ranks fourth out of our industry exposure: That list includes: ADI , ALAB , AMD , AVGO , KLAC , LRCX and NVDA . All seven of these are within 10% of new 52-week highs. These firms also ended last week positively, even with a $100 billion tariff applied to the global semiconductor market. On Wednesday, Trump unveiled a 100% tariff on semiconductor chips and imports of related equipment, targeting foreign-made products. The tariffs will be applied unless companies commit to building, or have already built, production facilities in the United States. Luckily, all seven of our semi companies are U.S.-based. Companies such as Apple , TSMC , Samsung and others with substantial U.S. manufacturing footprints are likely to receive exemptions, though the exact parameters remain uncertain. News over the weekend revealed the U.S. government will levy a 15% fee on some of Nvidia’s and AMD’s chip sales to China, which adds to the uncertainty of doing business overseas. What is certain, however, is that strengthening the U.S. semiconductor industry is a priority. Major chipmakers’ shares rallied amid the tariff announcement last week as investors mostly welcomed the news. The move, rooted in Section 232 national security justification, aims to accelerate domestic chip production, complementing the subsidies under the CHIPS and Science Act. Semis have already had a great summer. This is AMD the past year: The fact that this announcement took this long is surprising. Tariffs on bananas and iPhones — products that cannot or should not be built in the U.S. — are highly contested. However, it is widely accepted from both sides of the aisle and most economists that semiconductors are a critical pillar of modern economic and national security infrastructure for the U.S. Tariffs on imported chips and related technologies are viewed as a tool to protect and incentivize the U.S.-based production, ensuring a stable supply, safeguarding intellectual property and maintaining a competitive edge in the global AI race. Tariffs on imported semiconductors and related components help U.S. companies by making foreign-made chips more expensive relative to domestically produced ones, encouraging both manufacturers and end users to source from U.S.-based suppliers. Equipment makers such as KLAC and LRCX benefit as domestic fabs expand capacity, while chip designers like AMD and NVDA gain from increased availability of homegrown manufacturing partners and potentially reduced reliance on overseas foundries. This could bring supply chain risk for companies like TSM and NVDA much lower than it is today. Over time, this combination of market share retention, higher margins, and supply chain security can enhance competitiveness and support long-term growth. Risk Management Josh — Let’s take a look at KLA and Lam. KLAC’s bounce off the rising 50-day moving average is impressive, but it may already be fully valued based on the fundamental outlook. According to Tipranks, there are 19 analysts on the Street with coverage and the average price target is $950. Citi has the high target at $1,060 which the analyst reiterated on Aug. 4. I like the chart for LRCX better. This looks like a breakout in progress to me. Below I’m showing you another bounce off the 50-day plus a 200-day that is now starting to turn up after a year of trendlessness. In the next chart, I’m showing you a longer term look with that July 2024 top looming large overhead. That’s around $111-$113 and that would be a logical area of resistance. I like this name longer term if it can remain above the 50-week moving average, currently $80 per share. Below that, you’re going to get some congestion — or worse. Should the stock make it back to the old highs, it will be critical to watch whether the buyers can take it through. Disclosures: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. INVESTING INVOLVES RISK. EXAMPLES OF ANALYSIS CONTAINED IN THIS ARTICLE ARE ONLY EXAMPLES. THE VIEWS AND OPINIONS EXPRESSED ARE THOSE OF THE CONTRIBUTORS AND DO NOT NECESSARILY REFLECT THE OFFICIAL POLICY OR POSITION OF RITHOLTZ WEALTH MANAGEMENT, LLC. JOSH BROWN IS THE CEO OF RITHOLTZ WEALTH MANAGEMENT AND MAY MAINTAIN A SECURITY POSITION IN THE SECURITIES DISCUSSED. ASSUMPTIONS MADE WITHIN THE ANALYSIS ARE NOT REFLECTIVE OF THE POSITION OF RITHOLTZ WEALTH MANAGEMENT, LLC” TO THE END OF OR OUR DISCLOSURE. Click here for the full disclaimer.
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