AI chips and storage dual engine ignition! The semiconductor equipment industry's prosperity curve is on the rise again, ASML, Applied Materials, and Lam Research are at the center of the AI computing power shortage storm.

The latest research report released by the Wall Street financial giant Wells Fargo & Company shows that with the expansion of production capacity of 3nm, 2nm, and even more advanced chip processes, as well as the acceleration of production capacity expansion for CoWoS/3D advanced packaging, and DRAM/NAND storage chip production capacity, the long-term bullish logic of the semiconductor equipment sector is becoming increasingly strong. Wells Fargo & Company stated that global semiconductor equipment manufacturers such as ASML Holding NV ADR (ASML.US), Applied Materials (AMAT.US), Lam Research (LRCX.US), and KLA Corporation (KLAC.US) are expected to continue to perform well in the second quarter, and has raised its expectations for overall equipment spending in wafer fabs to around $190 billion from the previous estimate of around $180 billion for 2027. Analysts who are optimistic about the stock prices and fundamental prospects of the semiconductor sector believe that any news about capacity expansion by chip manufacturers like Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR and Samsung would act as positive catalysts for ASML Holding NV ADR, which focuses on covering EUV lithography machines, and for the semiconductor equipment giants specializing in advanced processes such as etching, thin film deposition, CMP, as well as 2.5D/3D advanced packaging. Several Wall Street financial giants recently released research reports stating that the semiconductor equipment sector is one of the biggest winners under the AI computing power and storage demand explosion. As global tech giants like Microsoft Corporation, Alphabet Inc. Class C, and Meta drive the construction of large-scale AI data centers, the semiconductor equipment sector is expected to see a rapid growth propelled by the expansion of production capacity for 3nm and below advanced AI chips, as well as CoWoS/3D advanced packaging, and DRAM/NAND storage chip production capacity. Wells Fargo & Company, along with another Wall Street financial giant, Citigroup, has recently revised upwards its global wafer fab equipment (WFE) spending expectations, indicating a super growth cycle for semiconductor equipment manufacturers as the global AI computing infrastructure construction wave and the macro backdrop of the "storage chip super cycle" heat up. These companies will be the core beneficiaries of the rapid expansion in production capacity of AI chips (including AI GPU/AI ASIC) and DRAM/NAND storage chips. ASML Holding NV ADR, Applied Materials, Lam Research, and KLA Corporation are the semiconductor equipment giants favored by both Wells Fargo & Company and Citigroup. Applied Materials has a ubiquitous presence in the chip factories. Unlike ASML Holding NV ADR, which has always focused on the field of lithography, Lam Research focuses more on etching, cleaning, patterning, and critical thin film processes, particularly in the HAR etch/deposition and related processes needed for 3D NAND storage. Applied Materials provides high-end equipment that plays a vital role in almost every step of chip manufacturing, covering processes like atomic layer deposition (ALD), chemical vapor deposition (CVD), physical vapor deposition (PVD), rapid thermal processing (RTP), CMP, wafer etching, ion implantation, and other crucial chip manufacturing processes. Compared to ASML Holding NV ADR and Applied Materials, KLA Corporation focuses on the detection segment. Especially in the control of chemical processes in chip manufacturing and the monitoring of chip yields, its breakthroughs in broadband plasma optical inspection technology and the latest chip defect detection systems provide semiconductor manufacturers with powerful tools to improve production efficiency and product quality. Its advanced technology and equipment hold a significant position in the industry and are widely used in various semiconductor manufacturing processes. Citigroup and Fidelity have raised their WFE spending forecasts, igniting a "semiconductor equipment prosperity cycle" driven by collective chip manufacturer capacity expansions. Analysts led by Joe Quatrochi at Wells Fargo & Company stated: "We expect that the second quarter of 2026 semiconductor capital equipment performance will continue to be positive, and we have raised our expectations above Wall Street consensus. While Applied Materials (AMAT.US) remains our top pick for semiconductor equipment stocks, we continue to believe that ASML Holding NV ADR (ASML.US) has lagged behind in performance so far this year, providing an interesting opportunity for catching up, as we expect performance will highlight accelerating demand and visibility." These analysts point out that despite significantly rising stock prices of related companies recently, research data show that investors are still bullish on semiconductor capital equipment stocks. The preferred ranking of analysts still remains: Applied Materials (AMAT.US), Lam Research (LRCX.US), ASML Holding NV ADR (ASML.US), and KLA Corporation (KLAC.US). The analysts stated that they have once again raised their WFE spending forecasts, with the most significant update coming from Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR and other advanced process wafer foundry/logic chip makers, as well as DRAM manufacturers like Samsung and Micron. They currently expect the scale of wafer fab equipment spending in 2027 to be around $190 billion, up from the previous estimate of around $180 billion. The analysts have also raised their forecast for 2028 from the previous $191 billion to $216 billion. Quatrochi and his team anticipate strong demand for equipment from Lam Research and KLA Corporation, leading them to raise their 2026 wafer fab equipment expenditure outlook by about $140 billion, with increasingly positive outlooks for 2027. The analysts note that they are interested in the optimistic outlook for 2028 given the growth confidence expressed by Applied Materials management. Quatrochi and his team stated: "We believe that ASML Holding NV ADR's (ASML.US) performance lag so far this year provides an interesting opportunity for catching up. We will raise our expectations above market consensus as we expect ASML Holding NV ADR management to emphasize that demand and visibility are accelerating into 2027. We believe that preliminary comments on 2027 demand expectations/growth will be a key factor driving stock prices, as we expect ASML Holding NV ADR to reaffirm its confidence in low numerical aperture (low-NA) EUV lithography tool capacity, which can support at least 60 tools in 2026, and at least 80 tools in 2027 (with infrastructure able to support 90 tools)." Another Wall Street giant, Citigroup, expects the global WFE market size to rise from around $145 billion in 2026 to $200 billion in 2027 and $250 billion in 2028 under an optimistic scenario, and has raised its target price for Applied Materials from $550 to $710, for Lam Research from $315 to $450, and for KLA Corporation from $206 to $290. Meanwhile, the multi-step reasoning driven by the AI intelligent agent wave led by Anthropic will sharply increase the need for KV cache and intermediate state storage when high-cost HBM and DRAM cannot economically handle all memory requirements, resulting in a systematic increase in demand for NAND, XL-Flash, high-performance storage layers, and related process equipment, thereby leading to Citigroup raising the target prices for AMAT, LRCX, and KLAC. The "AI bull market narrative" brings about a multiplier effect: expansion of production capacity by chip manufacturing giants like Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR ignites the demand for semiconductor equipment. According to Wall Street analysts bullish on the semiconductor equipment sector, the strong bull market trend of ASML Holding NV ADR (ASML) as well as Applied Materials, Lam Research, KLA Corporation, and other semiconductor equipment giants, is likely to not have fully ended yet, but may enter a stage of "high volatility, order-driven, performance realization type of rise" in the future, rather than a simple rise due to valuation. The global demand for AI computing infrastructure and enterprise-level storage chips is currently experiencing exponential growth, with supply lagging far behind demand intensity. This is evident from the exceptionally strong performance and capital expenditure guidance provided by the " global chip king" Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) and the significant growth in performance and outlook of global semiconductor equipment leaders Applied Materials and Lam Research Corp. The capital expenditure and expansion trend disclosed by Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR undoubtedly greatly benefits semiconductor manufacturing equipment suppliers and packaging equipment manufacturers. In the process of expanding wafer fabs and advanced packaging lines, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR requires a large number of equipment such as extreme ultraviolet (EUV) lithography machines, thin film deposition, etching, advanced packaging, etc., which are core products of ASML Holding NV ADR, Applied Materials, Lam Research, KLA Corporation, and other equipment giants. As the capacity expansion by chip manufacturing giants like Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR drives the demand for equipment globally, it serves as a catalytic effect for substantial order growth for these equipment suppliers and will drive the expansion of performance and capital expenditure flow in the entire advanced manufacturing equipment supply chain. From an engineering perspective, EUV/DUV lithography machines are not ordinary semiconductor equipment but bottleneck tools for continuing to miniaturize and improve yields in advanced logic chips, AI accelerators, and high-end DRAM processes related to HBM. Additionally, AI chip shortages, HBM/DRAM constraints, and the structural uplift of NAND demand all point to similar bottlenecks and constraints in AI computing power supply: a shortage not just in long-term GPU/TPU but also in wafer capacity, advanced chip manufacturing processes and advanced packaging production capacity, and storage chip production capacity due to significant gaps in etching/deposition/measure ment control/advanced packaging equipment and lithography throughput capacity. At the same time, Wall Street analysts believe that these supply bottlenecks are redefining the semiconductor equipment chain from a "cyclical recovery trade" to an "AI computing power capital expenditure super cycle trade". ASML Holding NV ADR CEO Kristof Fekey recently stated in an interview that the thriving global semiconductor market is likely to face long-term supply shortages in the foreseeable future and forecasted that the global semiconductor market could reach an astonishing $1.5 trillion by 2030. In the interview, Kristof Fekey mentioned that the strong demand for chips driven by AI, space satellite systems, as well as advanced technologies like Siasun Robot & Automation, far exceeds the industry's production capacity, predicting that the global semiconductor market could reach $1.5 trillion by 2030 (with the market size estimated at around $800 billion by 2025), and that "the AI demand is so strong that the market will be in a supply-constrained situation for quite a long time." This implies that the core contradiction in the global chip industry is shifting from the past "demand cycle fluctuations" to "AI computing power infrastructure-driven accelerated capacity expansion exceeding the speed of semiconductor equipment, wafer fabs, and advanced packaging and testing factory capacity expansion".