In an announcement that surprised virtually nobody, Intel Corp. (NASDAQ: INTC) recently sharply lowered the company’s first-quarter earnings expectations by 7% due to weak corporate demand for desktop PCs. The first reaction from many on Wall Street was to wonder whether the lowered Intel numbers mean lower capital expenditures. A new research report from UBS suggests that fears of a huge drop in capital expenditures (capex) may be unfounded.

The UBS team point out in the report that Intel has not always cut its capex guidance during these big product sales misses, and it has done so only twice out of the past six times the chip giant has negatively pre-announced. What this means for investors is that some of the top chip equipment stocks may be a great buy now. The UBS team is bullish on KLA-Tencor Corp. (NASDAQ: KLAC), Lam Research Corp. (NASDAQ: LRCX) and Teradyne Inc. (NYSE: TER).

KLA-Tencor

This is a technology leader in the design, manufacture and marketing of process control and yield management solutions for the semiconductor and related nanoelectronics industries. These industry leading technologies serve the semiconductor, LED and other related nanoelectronics industries. KLA-Tencor has a portfolio of industry-standard products and a team of world-class engineers and scientists.

The company has already informed Wall Street that first-quarter orders are tracking down from the fourth quarter. In fact, the UBS team points out that the company guided its March 2015 quarterly orders to be down 31% quarter-over-quarter to $600 million. The company also offered weak guidance when it announced earnings in January, and Wall Street seems to have accommodated that data into current expectations.

KLA-Tencor investors are paid a very solid 3.25% dividend. The UBS price target for the stock is $78. The Thomson/First Call consensus price target is lower at $70.05. The stock closed Monday at $61.92.

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Lam Research

Another top chip equipment rated Buy at UBS, the company designs, manufactures, markets, refurbishes and services semiconductor processing equipment used in the fabrication of integrated circuits. It offers plasma-etch products that remove materials from the wafer to create the features and patterns of a device. Many Wall Street analysts have highlighted the company and its peers as having a significant equipment opportunity from the NAND evolution as well. Lam Research also appears well-positioned to gain share in the wafer fab equipment market, driven by a strong focus on technology inflection spending over the next few years.

The UBS team is positive on the stock because they feel that the company’s higher exposure to memory chip customers, which has historically been approximately 56% of its total, could help Lam Research offset any potential near-term foundry order pause.

Lam Research investors are paid a 0.9% dividend. The UBS price target is posted at $88, and the consensus target is higher at $93.19. The stock closed Monday at $79.89 a share.

Teradyne

The company is a leading supplier of automatic test equipment used to test semiconductors, wireless products, data storage and complex electronic systems that serve consumer, communications, industrial and government customers. The company also provides photoresist strip systems, which remove the photoresist mask before a wafer proceeds to the next processing step; single-wafer wet and plasma-based wafer cleaning products that remove particles and residues from the wafer surface before or after adjacent processes; and refurbished and newly built legacy products. In 2014, Teradyne had revenue of $1.65 billion and it currently employs approximately 3,900 people worldwide.

The company posted solid fourth-quarter earnings result. Revenues grew 15% driven by strong system-on-a-chip demand, and the company’s operating profit grew 26% and generated over $300 million in free cash flow.

Teradyne investors receive a 1.2% dividend. The UBS price objective is $22.50, and the consensus target is at $21.62. Teradyne closed Monday at $19.85 per share.

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Clearly with the market whipsawing back-and-forth, we may be in for some rough seas. Investors looking to add these stocks to an aggressive growth portfolio may want to scale in some capital now for a partial buy and see if the market doesn’t sell off some in the spring.

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