Jefferies sees chip equipment market growing through 2028 despite AI worries

what happened

Analysts at Jefferies expect the market for semiconductor production equipment to keep growing through 2028, even as investors worry about AI spending, data center construction and elevated memory prices. According to Seeking Alpha, chipmakers and equipment suppliers sounded more upbeat about fundamentals in their September-quarter results, yet the gap between current performance and share price expectations has widened.

Jefferies sees the wafer fabrication equipment market reaching up to $200 billion in 2027 and about $220 billion in 2028. Those figures could fall short of investor expectations of $200 billion and $250 billion, respectively. The bank expects demand for GPUs, custom chips, CPUs, power semiconductors and memory to hold up as AI adoption grows, and long-term supply agreements improve visibility.

why it matters

For markets, the forecast supports revenue growth expectations for makers of lithography, deposition and etch tools and related firms. However, if investors view Jefferies' targets as conservative relative to their own expectations, that gap could limit further re-rating of the shares. Jefferies rates Applied Materials, Lam Research and Nvidia Buy, and ASML and SCREEN Holdings Hold.

market impact

Chip equipment makers: a growth outlook through 2028 supports the sector, but investor expectations sit higher

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