24 Feb 2026 08:34:35 ET │ 14 pages US Semiconductor Equipment SPIE Day 1 Takeaways CITI'S TAKE We hosted an investor dinner with Lam Research CFO & EVP Doug Bettinger and VP IR Ram Ganesh. Overall, management tone was positive with expectations for another relative WFE out-performance year driven by DRAM + foundry capacity with continued technology migrations in NAND and some new capacity. Dep/Etch SAM is expected to grow faster than WFE and Lam expects to hold 50%+ of the share. Lam's recent 2026 WFE view ...

Core Insights - U.S. stocks experienced an upward trend, with the Dow Jones index increasing by over 300 points on Thursday [1] - Penumbra Inc's shares surged after Boston Scientific announced its acquisition of the company at $374 per share, valuing Penumbra at approximately $14.5 billion [1] - Penumbra shareholders have the option to receive cash or Boston Scientific stock, with an expected distribution of about 73% cash and 27% equity [1] Company Performance - Penumbra reported stronger-than-expected preliminary fourth-quarter results, leading to a 12.1% increase in its share price to $351.25 [2] - Rich Sparkle Holdings Ltd saw a significant share price increase of 21.1% to $173.48 following its acquisition announcement of Step Distinctive Limited [3] - AXT, Inc. shares rose by 16.8% to $25.82, while Fluence Energy, Inc. gained 13.5% to $25.72 due to its contract for energy storage solutions [3] - ImmunityBio, Inc. reported preliminary net product revenue of $38.3 million, resulting in a 12.4% increase in its share price to $3.3950 [3] - Calix Inc's shares increased by 11.4% to $61.26 after a rating upgrade from JP Morgan [3] - Entegris Inc's shares rose by 10.2% to $114.70 following an upgrade from UBS [3] - Matson Inc gained 9% to $143.84 after announcing preliminary fourth-quarter results and a positive outlook for 2026 [3]

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the **US Semiconductor Equipment** industry, specifically the capital expenditure (capex) updates of the **Big Three**: **TSMC**, **Samsung**, and **Intel**. [1] Core Insights and Arguments - The **Big Three** account for approximately **59%** of the projected **$115 billion** global **2026 Wafer Fabrication Equipment (WFE)** spending, which is expected to grow by **10% year-over-year**. The breakdown includes **30%** growth in **NAND**, **12%** in **DRAM**, and **6%** in **Foundry/Logic (F/L)**. [1] - The equipment sector is believed to be in **Phase 2 of an upcycle**, with expectations that **2026 WFE** spending could reach **$126 billion** under a bullish scenario. [1] - **TSMC** is anticipated to guide its **2026 capex** between **$46 billion** and **$48 billion**, with potential increases throughout the year, based on investor discussions suggesting a target of **$50 billion**. [1][2] - **Intel** is projected to maintain a **2025 gross capex** of **$18 billion**, with expectations for **2026** to be around **$16 billion**. Intel's capex is expected to stabilize as foundry operations improve, particularly for back-end customers. [1][3] - **Samsung** has indicated flexibility in its **2026 capex**, planning to increase investments in response to growing **AI** demand. In a related note, **Micron** has raised its **FY2026** net capex to **$20 billion**, reflecting a **45% year-over-year** growth. [1][4] Additional Important Information - The top-rated equipment picks for investment are **Lam Research Corp (LRCX)** and **Applied Materials Inc (AMAT)**. [1] - The earnings reports for the companies are scheduled as follows: **TSMC** on **January 15**, **Intel** on **January 22**, and **Samsung** on **January 29**. [2][3][4] - The report includes a disclaimer regarding potential conflicts of interest due to Citigroup's involvement with the companies mentioned, emphasizing that investors should consider this report as one of many factors in their investment decisions. [5][10][11]

Summary of the Conference Call Transcript Industry Overview - **Industry**: US Semiconductors and Semi Equipment - **Outlook for 2026**: Positive sentiment towards AI-driven stocks, with expectations for broader market performance as AI technology spills over into other sectors [2][4] Key Companies Mentioned - **Top Picks**: - Lam Research Corporation (LRCX) - Applied Materials (AMAT) - Teradyne (TER) - Texas Instruments (TXN) - Marvell Technology Group (MRVL) - Micron Technology (MU) - NVIDIA (NVDA) - Advanced Micro Devices (AMD) - Broadcom (AVGO) Core Insights and Arguments - **AI Impact**: AI has significantly influenced stock performance, particularly in the semiconductor sector, with expectations for continued growth as inference costs decrease and training datasets expand [2][4] - **Capex Growth**: Anticipated hyperscale capital expenditures (capex) to increase by approximately 35% year-over-year in 2026, although financing debates may arise as capacity is absorbed [2][4] - **SPE Sector**: The semiconductor equipment (SPE) sector is expected to benefit from AI advancements, with LRCX and AMAT identified as top picks due to their early position in the estimate revision cycle [2][4] - **Teradyne's Potential**: TER is viewed as undervalued, particularly in the test market, with expectations of significant revenue growth from its NVDA-related business [2][4] - **Marvell's Growth**: MRVL is expected to benefit from its relationship with Amazon and the ramp-up of its Maia 300 product line with Microsoft [2][4] - **Micron's Performance**: MU is projected to see substantial EPS growth, driven by increasing demand for memory in an AI-driven economy [2][4] Financial Estimates and Valuations - **LRCX Financial Estimates**: - Revised CY26E revenues from $24.6 billion to $24.7 billion, with EPS increased from $6.04 to $6.12 [9][11] - Price target raised from $175 to $200 based on a 25x multiple applied to the revised EPS estimate for 2027 [11][20] - **AMD and MRVL**: AMD's data center GPU revenue expectations are considered conservative, while MRVL's pivot towards licensing key IP is highlighted as a growth driver [8][2] Additional Insights - **Analog Sector**: Anticipated inventory tailwinds for analog stocks as tariff uncertainties diminish and interest rates decline, with TXN favored for its free cash flow potential [2][4] - **Market Sentiment**: The semiconductor market is expected to experience a shift from defensive to more aggressive positioning as AI technologies mature [2][4] - **Valuation Risks**: Potential risks include macroeconomic downturns, international trade disruptions, and technological innovations that could alter market dynamics [23][2] Conclusion - The semiconductor industry is poised for growth in 2026, driven by AI advancements and increased capital expenditures. Key companies like LRCX, AMAT, and MU are positioned to benefit significantly, while broader market dynamics may shift as AI technology becomes more integrated across various sectors.

Core Insights - The Benzinga Stock Whisper Index highlights five stocks that are gaining attention due to their potential for growth and recent analyst upgrades [1] Group 1: Applied Materials Inc (NASDAQ:AMAT) - The semiconductor company has seen increased interest with price target upgrades from analysts, Barclays raised from $170 to $250 and Mizuho from $175 to $215 [2] - A global workforce reduction of approximately 4% is expected to facilitate future growth, with one-time charges estimated between $160 million and $180 million anticipated in the upcoming financial results [2] - Shares are trading near all-time highs, up around 40% year-to-date in 2025 [2] Group 2: Rambus Inc (NASDAQ:RMBS) - Rambus is trading at 25-year highs and is set to report third-quarter results on October 27, with expected earnings per share of 63 cents, up from 51 cents last year [3] - Quarterly revenue is anticipated to reach $175.43 million, an increase from $146.77 million in the same quarter last year [3] - The company has consistently beaten earnings and revenue estimates, with record product revenue reported in the second quarter [3] Group 3: Agnico Eagle Mines (NYSE:AEM) - The gold mining company has seen its shares rise nearly 100% year-to-date in 2025 and is set to report third-quarter results on October 29 [4] - Analysts expect earnings per share to increase to $1.82 from $1.14 in the previous year, with revenue projected at $2.88 billion, up from $2.16 billion [4] - The company has a strong track record of beating analyst estimates, achieving this in seven straight quarters [4] Group 4: Sterling Infrastructure Inc (NASDAQ:STRL) - The infrastructure company is experiencing strong interest ahead of its third-quarter results on November 3, following record results in the second quarter [5] - Expected earnings per share are projected to grow from $1.97 to $2.48, with revenue anticipated to rise from $593.74 million to $621.27 million [5] - Shares are trading near all-time highs and have increased over 100% year-to-date [5] Group 5: Spotify Technology (NYSE:SPOT) - The entertainment and streaming company has seen a decline of over 3% in shares this week, with third-quarter results expected on November 4 [6] - Analysts forecast earnings per share to grow to $1.85 and revenue to $4.89 billion, up from $1.59 and $4.38 billion respectively [6] - The company has struggled to meet analyst estimates for earnings and revenue in recent quarters, but a price target increase from JPMorgan from $740 to $805 reflects optimism about future growth [6]

Core Insights - The article emphasizes the importance of using data to understand corporate revenue distribution and the sensitivity of companies to tariffs, providing a comprehensive view of regional income and potential risks associated with trade policies [3][5]. Group 1: Regional Classification Data - Bloomberg is launching a regional classification fundamental data product to empower investors by providing a detailed view of company revenue by region, utilizing both reported and forecasted data [3]. - The product aims to create a multi-level standardized structure covering various regions and specific countries, offering insights into company revenue distribution [3][5]. Group 2: Sensitivity Scoring - A sensitivity scoring system has been developed to assess companies' exposure to tariff risks based on their revenue distribution across different countries and industries [5][6]. - The top ten companies with the highest tariff sensitivity scores from the Bloomberg U.S. Large Cap Index (B500) have been identified, which helps investors evaluate the potential impact of tariffs on their portfolios [6]. Group 3: Index Comparison - A bottom-up approach is used to compare the sensitivity scores of different indices, revealing that the European index (EMEAP) is most sensitive to current macroeconomic conditions [7][9]. - The analysis provides valuable insights for investors to enhance their risk management capabilities by understanding how different regions and industries are affected by new tariff policies [7]. Group 4: Cost Risk Analysis - The article highlights the importance of considering cost risks alongside revenue risks, particularly in industries like automotive, where tariffs on imported components can significantly impact profit margins [9][10]. - By combining sensitivity scores with supply chain data, investors can gain a deeper understanding of how global trade dynamics affect companies, identifying potential risks and opportunities [9][10]. Group 5: Industry Focus - Automotive - The automotive industry is used as a case study to illustrate how financial data can be leveraged to construct risk/opportunity maps based on profit margins and tariff sensitivity [12][14]. - The analysis of companies like Renault shows that indirect cost risks from suppliers can significantly affect production costs, even if the company itself is not directly impacted by tariff policies [12][15].

Summary of Conference Call Notes Industry Overview - **Industry**: US Semiconductors and Semiconductor Equipment - **Key Companies Mentioned**: SMTC (Semtech), MRVL (Marvell Technology) Core Insights and Arguments 1. **Tariff Exclusions**: There is a potential for broad tariff exclusions for US semiconductor companies based on investment commitments across the semiconductor supply chain, including both advanced and lagging edge technologies [2][3] 2. **Impact of US Administration Policies**: The Trump Administration's approach may allow US semiconductor equipment companies to resume shipments to certain customers under specific conditions, contrasting with the Biden Administration's focus on national security [3] 3. **SMTC Performance**: SMTC's stock has underperformed in the sector year-to-date, with expectations of a decline in revenue from LoRa technology following a strong Q1 [4][6] 4. **MRVL Revenue Guidance**: MRVL anticipates revenue in the range of $2.1-2.125 billion for FQ3:26, with strong growth expected in AI revenue and optical business despite the sale of its automotive ethernet business [7] 5. **Gross Margin Trends**: SMTC's gross margin is expected to decline to approximately 53% due to a shift in revenue mix, while MRVL's gross margin is projected to decrease by 20-30 basis points per quarter [6][7] Financial Performance and Guidance 1. **SMTC Financials**: - FQ2 revenue is expected to be around $256 million with EPS of $0.41, aligning with market expectations [8][12] - Guidance for FQ3 indicates revenue of $267 million and EPS of $0.43, slightly below street estimates [9] - Operating margin is projected at 19.0% [10] 2. **MRVL Financials**: - FQ2 results are expected to be in line with estimates, driven by unit trends for Trainium2 at Amazon [7] - Revenue growth in the optics business is anticipated to be around $50 million quarter-over-quarter [7] Other Important Insights 1. **Market Uncertainty**: Broader market uncertainty is affecting deal flow and potential asset sales for SMTC, with management indicating a cautious approach due to tariff implications [6][11] 2. **Portfolio Optimization**: SMTC is focusing on portfolio optimization as a strategic priority, although macroeconomic conditions have delayed progress [6] 3. **Investor Sentiment**: There is muted investor interest in SMTC, and management credibility has yet to recover fully [4] Conclusion The semiconductor industry is navigating complex tariff policies and market dynamics, with specific companies like SMTC and MRVL facing unique challenges and opportunities. The focus on investment commitments for tariff exclusions and the impact of administrative policies will be critical in shaping future performance.

Group 1 - The stock of Applied Materials Inc (NASDAQ:AMAT) has struggled to gain traction after its February 14 earnings report, breaking below a trendline that connected higher lows since late December [2] - Following the earnings report, shares attempted a rally but were rejected at the 50- and 80-day moving averages, with the 80-day trendline being significant as it acted as support in April 2024 and capped rallies in subsequent months [2] - The stock is currently more than 30% below its all-time high in July and has slipped beneath prior support levels at $175, indicating elevated downside risk and making it an opportune time to buy put options [3] Group 2 - Wall Street analysts maintain an overly optimistic outlook on AMAT, with 26 "buy" ratings, eight "hold" recommendations, and only one "sell," suggesting potential for downgrades [4] - Options traders exhibit signs of over-exuberance, with a 10-day call/put volume ratio of 2.10, placing it in the 92nd percentile of its annual range, which has historically preceded weak price action [5] - The recommended put options have a leverage ratio of 8.0 and are expected to double with an 11.3% drop in the underlying equity [6]