Bernstein updated its WFE outlook and adjusted stock price targets on Wednesday after materially increasing its forecast for global wafer fabrication equipment spending across 2026 to 2028.
In its note, the firm raised its 2026 WFE forecast to $148 billion, an increase of 21.4% year-on-year, up from a prior estimate of $141 billion. The 2027 projection was lifted to $175 billion from $158 billion, and the 2028 estimate was revised to $198 billion from $164 billion, bringing $200 billion of annual WFE spending into view.
Bernstein said the bulk of the upward revisions were driven by the memory segment, with DRAM identified as a primary contributor. The firm raised its 2027 DRAM WFE estimate by $3.4 billion and now forecasts 25% growth for DRAM WFE in 2027 versus an earlier expectation of 15% growth.
China-related demand revisions were also a notable factor. Bernstein increased its China WFE demand outlook by $2.3 billion for 2026, by $6.7 billion for 2027 and by $16.1 billion for 2028, pointing to expansion plans at YMTC and CXMT as supporting drivers.
Following the forecast revisions, Bernstein raised its price target on Lam Research to $340 from $325 and lifted its KLA Corp. target to $1,975 from $1,875. The firm left its Applied Materials price target unchanged at $525. All three companies retained Outperform ratings from the firm.
Bernstein additionally said it is "growing more positive on the idea that the current upcycle in equipment spending could be multi-year," and noted that "WFE estimates have the potential to continue moving higher."
Market reactions included intraday gains reflected in the coverage snapshot: Applied Materials up 4.61%, Lam Research up 6.64% and KLA up 4.66%.
The firm ranked its preferences among the three names, stating it prefers Applied Materials first given its leading-edge logic and DRAM exposure, followed by Lam Research and then KLA.
Contextual note - The firm's revised forecasts and target adjustments center on memory investment trends and specific Chinese expansion plans cited in the analysis. The commentary highlights the potential for further upward revisions in WFE estimates, though it does not specify a firm timetable for such changes.