Citigroup raises its target price for equipment stocks, and AI spending is pushing the semiconductor cycle toward the “equipment end”

BlockBeats News, June 18 — Semiconductor equipment stocks strengthened in the U.S. stock market on Wednesday, as Citigroup raised target prices for Applied Materials, Lam Research, and KLA, and maintained buy ratings, stating that AI capital expenditures by large tech companies are still upwardly revised.

Citigroup analyst Atif Malik raised the target price for Applied Materials 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 new all-time high during the session; Lam Research also briefly reached new highs.

This report is seen by the market as a re-pricing of the wafer fabrication equipment market. Citigroup expects that driven by AI computing power, storage expansion, and advanced process investments, the global WFE market size could grow from $145 billion in 2026 to $200 billion in 2027, reaching $250 billion in 2028.

For the Asian market, this logic directly maps to semiconductor equipment, advanced packaging, storage expansion, and capital expenditures at wafer fabs. Previously, the market focused more on GPUs and server systems; now, sellers are spreading the prosperity of the AI industry chain to the "equipment manufacturing AI chips" itself.

The risk is that equipment stocks have already risen sharply, and valuations are highly sensitive to capital expenditure expectations. If cloud providers’ AI spending slows down or storage manufacturers tighten expansion discipline again, the profitability elasticity on the equipment side could also amplify in the opposite direction.