Barclays on Monday revised higher its outlook for the wafer fabrication equipment market and updated price targets and earnings-per-share forecasts for three major equipment suppliers.
Analyst Tom O'Malley raised the bank's 2027 WFE estimate to $209.5 billion from $159 billion, a projection Barclays said sits above the Street-implied figure of $172 billion. The bank cited materially stronger expected spending across DRAM, NAND and foundry/logic as the drivers behind the adjustment.
Barclays detailed growth assumptions within memory and leading-edge segments. DRAM is now expected to rise 115% year-over-year in 2026 and 40% in 2027. NAND estimates were significantly lifted, with 2027 growth now modeled at 60% versus a prior 10% forecast. Investment at leading-edge nodes is projected to expand 50% in 2027, supported by continued capital deployment at TSMC, Samsung and Intel.
Following the WFE revision, Barclays raised price targets and 2027 EPS estimates for the equipment vendors it covers:
- Applied Materials - Price target increased to $590 from $500, implying roughly 18% upside. Barclays lifted its 2027 EPS estimate for the company to $20.23 from $17.13.
- KLA Corporation - Target was raised to $2,250 from $1,700, and 2027 EPS was raised to $74.53 from $55.96.
- Lam Research - Target was lifted to $335 from $275, which Barclays noted is roughly in line with the stock's current trading level; 2027 EPS was raised to $10.47 from $8.55.
On valuation, Barclays observed that market prices appear to already reflect 2028 expectations for these names, stating that "it's clear that '28 is already contemplated in these names," and suggesting the market may be trading ahead of the current estimate cycle.
This set of revisions underscores Barclays' view that the semiconductor capital expenditure cycle will strengthen across the board, pushing the WFE market above the $200 billion threshold in 2027. The bank's updated forecasts hinge on substantially stronger demand and investment across memory and leading-edge foundry segments.