Investment firm Stifel, led by five-star analyst Brian Chin, has raised its price targets on Applied Materials (AMAT), KLA (KLAC), and Lam Research (LRCX), while keeping its Buy ratings on all three semiconductor equipment stocks. The updated targets are as follows:
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High conviction LRCX bulls now have this Tradr ETF- Applied Materials: raised to $650 from $530
- KLA: raised to $270 from $191
- Lam Research: raised to $425 from $325
The reason behind the upgrades is fairly straightforward. AI systems need large amounts of memory and advanced processors, and the rise of agentic AI is pushing that demand even higher. However, chipmakers cannot quickly increase production because semiconductor factories are expensive and complex. As a result, chip supplies remain tight even as companies try to produce more.
Shortage Has Pushed Memory Prices Sharply Higher
Unsurprisingly, this shortage has pushed memory prices sharply higher. In response, DRAM manufacturers are upgrading their existing factories and improving their equipment so that they can produce more chips from the same facilities. Those upgrades require wafer fabrication equipment (WFE), which is the machinery used during the chipmaking process.
Because of this, Stifel expects WFE spending to reach between $145 billion and $150 billion in 2026. More importantly, the firm believes that the spending boom could continue for several years, and reach about $192 billion in 2027 and $225 billion in 2028.
Therefore, Applied Materials, KLA, and Lam Research are each set to benefit from this spending, albeit in different ways. For instance, Applied Materials will benefit because it supplies a wide range of chip-production tools. Meanwhile, KLA focuses on inspection equipment that finds manufacturing defects, while Lam Research makes the machines that shape and add materials to semiconductor wafers.
Which Memory Stock Is the Better Buy?
Overall, out of the three memory stocks mentioned above, analysts think that LRCX stock has the most room to run. In fact, LRCX’s average price target of $380.52 per share implies 8.1% upside potential. On the other hand, analysts expect the least from AMAT, as its average price target of $629 per share implies 4.2% upside. (See LRCX Stock Forecast).
