Wolfe starts semiconductor capital equipment with ‘broadly positive’ view

Wolfe Research initiated coverage of four stocks in the semiconductor capital equipment space with a “broadly positive” view, given the long term benefit the firm sees from the slowing of Moore’s Law. The firm sees these benefits to include larger die sizes due to more limited shrink and higher chip average selling prices as more industry money is spent to fund capital expenditures. Memory Wafer Fabrication Equipment, or WFE, is cyclically depressed, but the firm expects a modest 15% year-over-year rebound in 2024 with “room for upside as spending eventually moves to mid-cycle norms,” the analyst tells investors. In that context, Wolfe initiated coverage of Lam Research (LRCX) with an Outperform rating and $825 price target, started ASML (ASML) with an Outperform rating and EUR 730 price target, initiated coverage of Applied Materials (AMAT) with an Outperform rating and $185 price target and started KLA Corp. (KLAC) with an Outperform rating and $600 price target.