Woofun AI reports that Citi analyst Atif Malik elevated price targets for Applied Materials to $710, Lam Research to $450, and KLA to $290, maintaining buy ratings as large tech firms continue upward revisions to AI capital expenditures. This adjustment reflects a broader market repricing of the wafer fabrication equipment sector, with Applied Materials closing up 4.4% on Wednesday.

The bank anticipates the global WFE market size will expand from $145 billion in 2026 to $200 billion in 2027, potentially reaching $250 billion in 2028, driven by AI computing power, expanded storage, and advanced process investments. While market attention previously centered on GPUs and server hardware, the narrative is now shifting toward the equipment manufacturers enabling AI chip production.

However, valuations remain sensitive to capital expenditure expectations; any slowdown in cloud provider spending or renewed discipline in storage production could inversely magnify profit elasticity risks for these equipment stocks.