Citi raises target prices for equipment stocks, AI spending pushes semiconductor cycle towards the "equipment side"

BlockBeats News, June 18 — Semiconductor equipment stocks rose in the US market on Wednesday after Citi raised its price targets for Applied Materials, Lam Research, and KLA, maintaining its buy ratings and stating that AI capital spending by major tech companies continues to be revised upward.

Citi analyst Atif Malik raised Applied Materials' price target from $550 to $710, Lam Research from $315 to $450, and KLA from $206.40 to $290. According to Investor's Business Daily, Applied Materials closed up 4.4% on Wednesday, hitting a historic intraday high; Lam Research also briefly reached a new peak.

This report is seen by the market as a repricing of the wafer manufacturing equipment sector. Citi expects that fueled by investments in AI computing power, storage expansion, and advanced processes, the global WFE market size could grow from $145 billion in 2026 to $200 billion in 2027, and reach $250 billion in 2028.

For the Asian market, this logic directly applies to semiconductor equipment, advanced packaging, storage expansion, and wafer fab capital expenditures. Previously, the market focused more on GPUs and complete servers, but now sellers are spreading optimism across the AI industry chain to the equipment used to manufacture AI chips.

The risk is that equipment stocks have already surged significantly, and valuations are highly sensitive to capital expenditure expectations. If AI spending by cloud providers slows down or storage manufacturers strengthen their expansion discipline, the earnings elasticity on the equipment side could also amplify in the opposite direction.