In order to solve the worldwide chip shortage, and satisfy growing industry demand around the world, increasing investment is being made into semiconductor manufacturing. Companies in the semiconductor industry have bright prospects due to this and other technological advancements. As such, both Applied Materials (NASDAQ:) and Lam Research (LRCX) should benefit from the industry’s growth. Which stock is the best buy right now? Let’s find out.Applied Materials, Inc. (AMAT) in Santa Clara, Calif., and Lam Research Corporation (NASDAQ:) in Fremont, Calif., are two prominent players in the semiconductor industry. AMAT offers material engineering solutions to make semiconductor chips for electronic producers of flat panels, modules, and solar photovoltaic cell cells. AMAT also provides equipment for coating flexible electronics and packaging. LCRX is a company that designs, manufactures market, refurbishes, services, and markets semiconductor processing equipment for the production of integrated circuits. This includes integrated device producers (IDMs), semiconductor memory manufacturers (foundry), and those who make non-volatile and dynamic random-access memories (DRAM), as well as logic devices.

The global semiconductor market saw a 29.7% increase in sales over the previous year, despite the shortage of semiconductor chips. Governments and companies are investing heavily in the sector to address the crisis of semiconductor chips and meet growing demand. These investments, along with the recent technological advances made by chipmakers, position the industry for steady growth.

Investor optimism in this space is evident in the SPDR S&P Semiconductor ETF’s (XSD) 13.8% gains over the past three months, versus the SPDR S&P 500 Trust ETF’s (SPY) 4.1% returns. Global semiconductor markets are expected to expand at 7.7% annual growth rate to $778 billion in 2026. Both AMAT and LRCX will benefit.

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