Veeco Instruments (VECO): Results Far Exceed Expectations Amid Memory Capacity Boom

Riverwater Partners, an investment management company, released its 'Sustainable Value Strategy' Q2 2026 investor letter. The letter can be downloaded here. Small-cap stocks achieved their best first-half performance since 1991, with the Russell 2500 Value Index rising 17%, driven by the technology sector. The Sustainable Value Strategy underperformed its benchmark in the second quarter. The shortfall was driven almost entirely by stock selection, particularly the absence of SanDisk (SNDK), which rose approximately 720% year to date and contributed an estimated 6% of the Russell 2500 Value Index's 2026 return. Technology became the strategy's largest overweight at 17%, largely because index reconstitution sharply reduced the benchmark's technology allocation. Looking ahead to 2026, the outlook for small-cap equities remains constructive due to improving monetary conditions and attractive valuations, despite a lack of anticipated rotation toward higher-quality businesses. The firm remains committed to disciplined, quality-focused investing; historically, quality prevails over the long term. Additionally, reviewing the Fund's top five holdings could help identify its best picks for 2026.

In its second-quarter 2026 investor letter, Riverwater Sustainable Value Strategy highlighted Veeco Instruments Inc. (NASDAQ:VECO) as a leading contributor to performance. Veeco Instruments Inc. (NASDAQ:VECO) provides laser annealing and ion beam deposition equipment used in semiconductor manufacturing to make electronic devices. On September 18, 2026, Veeco Instruments Inc. (NASDAQ:VECO) closed at $42.72 per share. Over the past month, Veeco Instruments Inc. (NASDAQ:VECO) declined 8.64%, but its shares are up 46.45% over the past year. Veeco Instruments Inc. (NASDAQ:VECO) has a market capitalization of $2.61 billion, and its stock has traded within a 52-week range of $26.00 to $86.63.

Riverwater Sustainable Value Strategy stated the following regarding Veeco Instruments Inc. (NASDAQ:VECO) in its Q2 2026 investor letter:

"Veeco Instruments Inc. (NASDAQ:VECO was our largest contributor for the quarter. As a supplier of laser annealing and ion beam deposition equipment, the company is integral to manufacturing advanced semiconductors, including the high bandwidth memory essential for AI data centers. Orders and results came in well ahead of expectations as memory makers raced to add capacity, causing the stock to more than double in three months. Consistent with our discipline, we trimmed the position repeatedly throughout the quarter as the position size grew. Veeco remains a holding at an appropriate, defensible, weight."