By Nate Wolf

Chip stocks have slipped up in recent days but that isn't a sign of trouble for the companies that manufacture chip makers' equipment, according to Barclays.

The investment bank reaffirmed Overweight ratings on Applied Materials and KLA Corp. in a research note, and lifted its price targets on the stocks to $590 from $500 and to $2,250 from $1,700, respectively. Barclays also reiterated a Neutral rating on fellow equipment maker Lam Research and boosted its target to $335 from $275.

All three stocks have climbed at least 75% this year, and all three were rising in premarket trading Thursday. Applied Materials rose 4.7% to $520.15; KLA jumped 3.9% to $2,218.69; and Lam Research was up 4.6% to $336.72.

Barclays lifted its estimate for the total wafer fab equipment market to $154 billion from a previous forecast of $139 billion. The firm then expects the market to expand by 36% to $209.5 billion in 2027, up from an earlier estimate of $159 billion.

What is causing all that growth? Everything artificial intelligence: "The capex cycle is much stronger across the board," wrote analyst Tom O'Malley.

On the memory side, investments from Micron Technology, SK Hynix, and Samsung Electronics are driving enormous growth for the chip equipment makers. Supply constraints and hot demand also continue to spur investments by AI chip manufacturers like Taiwan Semiconductor Manufacturing and Intel.

Write to Nate Wolf at nate.wolf@barrons.com

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June 11, 2026 08:31 ET (12:31 GMT)

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