Barclays raises price targets on chip stocks after raising WFE estimates

Investing.com -- Barclays lifted its wafer fabrication equipment estimates and raised price targets on Applied Materials, KLA Corporation, and Lam Research in a note on Wednesday.

The bank projects the WFE market will surpass $200 billion in 2027 as the semiconductor capex cycle strengthens across the board.

Analyst Tom O'Malley raised his 2027 WFE estimate to $209.5 billion from $159 billion, well above the Street-implied figure of $172 billion, driven by significantly stronger DRAM, NAND, and foundry/logic spending.

DRAM is now forecast to grow 115% year-over-year in 2026 and 40% in 2027, while NAND estimates were raised sharply to 60% growth in 2027 from a prior 10%. Leading edge is projected to grow 50% in 2027, supported by continued investment at TSMC, Samsung, and Intel.

The Applied Materials price target was increased to $590 from $500, implying roughly 18% upside. The firm lifted its 2027 EPS estimate for AMAT to $20.23 from $17.13.

KLA's target was raised to $2,250 from $1,700, and 2027 EPS was raised to $74.53 from $55.96.

Lam Research's target was lifted to $335 from $275, roughly in line with where the stock trades today, with 2027 EPS raised to $10.47 from $8.55.

Barclays noted that when looking at valuation, "it's clear that '28 is already contemplated in these names," suggesting the market has moved ahead of the current estimate cycle.

You May Also Be Interested In

• Tesla Crash Into Texas Home Now Under Federal Safety Probe - WSJ
• Workday must face claims over AI hiring software bias
• MacroGenics to receive $24.5M milestone from Sanofi on FDA approval