What happened
Shares of Axcelis Technologies (ACLS 1.56%) gained 21.7% in March 2017, according to data from S&P Global Market Intelligence.
So what
The maker of manufacturing equipment for semiconductor factories is largely following the medium-term trajectory of the industry-tracking PHLX Semiconductor index. Being a small-cap player in that large sector, Axcelis saw its share prices falling in early March only to whipsaw back to a strong gain on heavy trading volume.
Image source: Getty Images.
The chip industry has been crushing the wider market recently, and Axcelis naturally tapped into that broader sector gain.
Now what
The specific driver of March's market strength in the semiconductor industry can be pinned on Micron Technology (MU 3.17%). The memory chip maker reported strong second-quarter earnings on March 23, inspiring a plethora of analyst upgrades and a general surge across the chip sector.
Micron's report showed cloud computing systems driving a solid flow of memory chip orders, and that trend should translate into similar strength in other corners of the semiconductor industry. If semiconductor analysts and Micron's management are reading those tea leaves right, there should be several years' worth of impressive order volumes on tap for companies like Axcelis, which support the very foundation of the chip-building sector.
