By Kit Norton

Three chip equipment maker stocks -- Lam Research, Applied Materials, and KLA Corp. -- were all surging on Wednesday after Citi hiked their price targets. Applied Materials vied for the top spot on the S&P 500.

In midday trading, Applied Materials was up 8% to $614.13; Lam Research gained 5.4% to $389.09; and KLA added 2.8% to $244.02. All three have climbed at least 100% this year.

The higher price targets came from Citi analyst Atif Malik, who also reaffirmed his Buy ratings on the stocks. His price targets: Lam Research to $450 from $315, KLA to $290 from $206.40, and Applied Materials to $710 from $550.

Malik made the case for his higher price targets by pointing to Big Tech's massive AI spending, which shows no signs of slowing down any time soon.

Applied Materials, Lam Research, and KLA make wafer fab equipment, which turns raw silicon wafers into microchips.

Malik estimates the wafer fab market will grow by leaps and bounds in the next two years, based on Citi's hyperscaler capital spending model.

This year, the market is worth around $145 billion, according to Citi. The 2027 projection is $200 billion in 2027 and $250 billion in 2028.

Citi expects hyperscaler spending to increase 84% this year, 56% in 2027, and 38% in 2028. Amazon.com, Microsoft, Alphabet, Meta Platforms, and Oracle are expected to pony up more than $1.1 trillion in 2027, up from $650 billion this year.

Along with the growing wafer fab equipment market, Malik thinks the three companies will benefit from an uptick in NAND demand because of tightening DRAM supply.

DRAM is a type of semiconductor memory used in computers, smartphones, and gaming consoles. NAND refers to machinery used to manufacture, test, or package NAND flash memory, storage technology that holds data without power.

"The rise of agentic AI is driving a structural increase in NAND demand as memory requirements surge and DRAM supply tightens," the analyst said.

Malik raised his price targets a few days after Barclays also raised its price targets on the stocks: Applied Materials to $590 from $500; KLA, to $2,250 from $1,700; and Lam Research, to $335 from $275.

Barclays reaffirmed its Overweight ratings on Applied Materials and KLA and its Netural rating on Lam Research.

Like Citi, Barclays increased its price targets based on rising estimates around the total wafer fab equipment market.

Write to Kit Norton at kit.norton@barrons.com

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June 17, 2026 12:10 ET (16:10 GMT)

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