Citibank has raised its rating on semiconductor equipment manufacturers.$Applied Materials (AMAT.US)$、$Lam Research (LRCX.US)$and$KLA Corp (KLAC.US)$its target price and stated that it is highly optimistic about the demand outlook for NAND equipment.
During Wednesday's trading session in the U.S. stock market,$Applied Materials (AMAT.US)$The stock price rose by more than 8%,$KLA Corp (KLAC.US)$increased by more than 6%,$Lam Research (LRCX.US)$All increases exceeded 4%.
The firm noted that the widening gap between required DRAM and available supply is driving adoption of supplementary solutions such as key-value (KV) cache offloading.
Citi analysts stated: 'We currently project that, under an optimistic scenario, the global wafer fab equipment market will reach approximately $145 billion, $200 billion, and $250 billion in 2026, 2027, and 2028, respectively—implying robust 25% growth by 2028. Given ongoing capacity constraints and expansion plans from Taiwan Semiconductor and memory chipmakers, along with recent progress by Intel and Samsung foundries, we hold a more positive view on the wafer fab equipment outlook for 2028.'
Citi indicated that the rise of Agentic AI is triggering 'structural growth' in NAND demand, as soaring memory requirements intensify DRAM supply tightness.
'Multi-step reasoning workflows are dramatically expanding the footprint of key-value caches, causing total memory demand to far exceed what high-cost HBM and DRAM can efficiently support—particularly in an environment of constrained DRAM supply and elevated pricing... This does not indicate weakening demand; rather, it underscores the growing gap between required and available memory. Consequently, we observe companies accelerating adoption of complementary solutions such as key-value cache offloading—i.e., shifting intermediate model states to lower-cost, higher-capacity storage tiers.'
Citi pointed out that this shift, combined with continued innovation in high-performance NAND technologies such as HBF and XL-Flash, represents a structural tailwind for NAND demand. Both cloud and edge applications are increasingly relying on NAND to scale capacity, control costs, and support the ever-more-complex workloads of Agentic AI.
Earnings Guidance
Looking ahead, Citigroup has, for the first time, introduced a forecast for…$Applied Materials (AMAT.US)$、$Lam Research (LRCX.US)$and$KLA Corp (KLAC.US)$We have revised our earnings forecasts for the 2028 calendar year and raised our target prices accordingly, based on the projected profitability for that year.
$Applied Materials (AMAT.US)$: Citigroup raised its price target from $550 to $710. The firm projects that total revenue will grow year over year by 30% and 22% in the 2027 and 2028 calendar years, respectively, with the semiconductor process segment expanding by 35% and 25%, and the global services and support segment increasing by 14% and 13%.
$Lam Research (LRCX.US)$: Analysts have raised their price target from $315 to $450. "We expect total revenue for the 2027 and 2028 calendar years to grow year over year by 28% and 22%, respectively, with wafer fabrication equipment systems expanding by 36% and 25%, and customer support growing by 12% and 13%."
$KLA Corp (KLAC.US)$The investment firm forecasts that its total revenue will grow by 24% and 22% in the 2027 and 2028 calendar years, respectively. Specifically, semiconductor process control systems are expected to expand by 28% and 25%, semiconductor process control services by 14% and 14%, and the electronic packaging and components segment by 15% and 15%. Based on a 40x price-to-earnings multiple applied to 2028 calendar-year earnings per share, Citigroup has raised its target price significantly from the previous $206.40 to $290.
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