Goldman Sachs Group, Inc.: Maintains "Buy" rating on ACMR.US with a target price of $166.

Goldman Sachs Group, Inc. has published a research report maintaining a "Buy" rating on ACMR (ACMR.US), with a 12-month price target of $166, based on a discounted price-to-earnings ratio of 40 times the projected earnings for 2030, calculated up to 2027. Based on the closing price of $74.44 on September 4, this represents an upside potential of 123%. The firm continues to be optimistic about the company's product portfolio upgrade to advanced equipment, as well as the product expansion of the ACM Planetary Family in areas such as cleaning, furnace tubes, PECVD, and advanced packaging. The firm expects that China's WFE spending will grow by 13%, 20%, and 15% year-on-year in 2026, 2027, and 2028, respectively, reaching $61 billion by 2028. Goldman Sachs Group, Inc. invited the company's chairman to engage during the China AI roadshow held in Shanghai on September 8, focusing on product expansion driven by AI chips and differentiated equipment, as well as the order prospects supported by China WFE spending and the ongoing trend of domestic production. The company is continuously expanding its SAM through new SPE products, extending its coverage from cleaning equipment to plating, furnace tubes, advanced packaging, coating and developing, as well as PECVD, driving SAM expansion from the global cleaning equipment market of $7.4 billion to $22 billion. Management continues to promote innovation in SPE design, which not only helps create differentiation but may also develop its own supply chain. The company invests considerable time in foundational R&D and offers competitive product features. Related innovations may include new structural designs that reduce the need for robotic arms to improve production efficiency or save sulfuric acid, enhancing environmental protection; they may also include new designs for thermal-related components, nozzles, and other parts. The company believes that generative AI is placing new demands on SPE, which may bring about changes in the competitive landscape, favoring manufacturers with strong design capabilities. For example, in cleaning equipment, generative AI may lead to smaller-sized ICs and 3D structures, making cleaning more challenging. These new challenges may drive upgrades in cleaning equipment specifications and lead to higher average selling prices. Additionally, to accelerate yield improvements, customers may increase cleaning frequency, for instance, cleaning after every 1 to 2 processes, thus expanding SAM. Management anticipates that the expenditure on wafer fab cleaning equipment could rise from the current high single-digit percentage of overall WFE to a mid-double-digit level, and the company's strong R&D capabilities may assist customers in enhancing their competitiveness and achieving success. Regarding orders, the company remains optimistic about end-user demand, expecting that the year-on-year growth rate of orders on hand in the second half of 2026 may exceed that of the first half. Cleaning equipment remains the primary contributor to orders on hand, but plating equipment is witnessing the fastest growth, reflecting progress in new product expansion. Strong orders are primarily driven by the increase in China's WFE spending, mainly in the storage and advanced logic sectors, while the ongoing trend of domestic production also supports this growth. Management estimates that the current domestic production rate of cleaning equipment is about 30%, which may continue to rise to 50%-60% in the future.