M What's Changed? We revise up our 2026 forecast from $136bn (up 13% y/y) to $143bn (up 23%) and our 2027 forecast comes up from $161bn (up 19%) to $182bn (up 27%). For 2026, we revise up DRAM by $5bn, NAND by $2bn and leave foundry logic unchanged, while for 2027 we revise up DRAM by $9bn, foundry logic by $9bn, and NAND by $2bn. Numbers go higher & high (again). It's only been 1 month since we last raised numbers (Semiconductor Capital Equipment: Mid 4Q'25 WFE update, higher & higher (20 Jan 2026)) and ou ...

Market Overview - Wall Street's main indexes closed lower as investors reacted to President Trump's nomination of Kevin Warsh for Federal Reserve Chair, viewing it as a hawkish choice amid mixed earnings reports and inflation concerns [9][10] - The Dow Jones Industrial Average fell by 179.09 points (0.36%) to 48,892.47, the S&P 500 lost 29.98 points (0.43%) to 6,939.03, and the Nasdaq Composite decreased by 223.30 points (0.94%) to 23,461.82 [10] Federal Reserve and Monetary Policy - Kevin Warsh is expected to favor lower interest rates but will not pursue aggressive monetary easing, suggesting a potential shift in the Fed's approach to monetary policy [9][10] - Markets are adjusting to the implications of Warsh's nomination, with the U.S. dollar gaining and precious metals experiencing a sell-off [10] Earnings Reports - Apple shares closed up 0.4% after a forecast of higher-than-expected revenue growth of up to 16% for the March quarter, despite warnings about rising memory-chip prices affecting profitability [5][10] - Microsoft shares fell 0.7% after a significant 10% drop the previous day, attributed to disappointing cloud revenue [6][10] - Tesla shares rose 3.3% following reports of potential deals with SpaceX, contributing positively to the S&P 500 [7][10] - Verizon Communications saw an 11.8% increase in shares after forecasting annual profit and free cash flow above market expectations, driven by strong subscriber growth [7][10] Sector Performance - The S&P's Materials index led declines with a 1.9% loss, influenced by a sell-off in gold and silver prices [4][10] - Defensive consumer staples sector was the top performer, rising 1.4%, with Colgate-Palmolive gaining 5.9% after positive sales forecasts [4][10] Market Dynamics - The Russell 2000 index, which has been outperforming large-cap indexes, lagged with a 1.6% loss on the day but ended the month up more than 5% [2][10] - Overall, declining issues outnumbered advancers on both the NYSE and Nasdaq, indicating a bearish sentiment in the market [8][10]

Market Overview - US stock markets ended lower due to uncertainty surrounding President Trump's nomination of Kevin Warsh to lead the Federal Reserve, impacting future interest rate policy [1][3][15] - Concerns over the Fed's independence and higher-than-expected inflation data contributed to reduced risk appetite among investors [3][5] Commodity Performance - Gold prices fell approximately 11%, while silver prices dropped more than 30%, reversing a previous rally [7][9] - The selloff in metals significantly affected mining stocks, leading to sharp losses in the sector [4][8] Index Performance - The S&P 500 declined by 0.4%, the Dow Jones Industrial Average also fell by 0.4%, and the Nasdaq Composite dropped nearly 0.9% [7][9] - Small-cap stocks underperformed larger peers due to heightened interest rate concerns [7] Biggest Losers - Newmont, a mining stock, fell by 10.4% as gold prices plunged [9] - Freeport-McMoRan dropped by 7.2% amid the metals sell-off [9] - Microsoft shares extended losses due to weak cloud revenue growth, while Apple slipped 0.3% despite better-than-expected quarterly profits [8][9] Biggest Gainers - Tesla rose by 4.3% following recent profit reports and a recovery from prior losses [10][11] - Consumer staples stocks, particularly Colgate-Palmolive, gained after forecasting higher annual sales [10] Bond Market and Inflation Impact - The 10-year Treasury yield remained near 4.24%, with concerns that the Fed may delay rate cuts due to higher-than-expected producer inflation [12] - Higher yields can pressure stock valuations and dampen investor demand [12] Global Market Outlook - European markets experienced gains, while Asian markets showed mixed performance [13] - Future market direction will depend on interest rate signals, inflation trends, and earnings growth [13]

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]

Core Viewpoint - Leverage Shares by Themes is expanding its offerings in the single-stock leveraged ETF market with the launch of seven new products aimed at traders seeking amplified exposure to individual equities [1]. Group 1: New Product Launches - The new ETFs will begin trading on December 18 and are designed to deliver 200% of the daily performance of their underlying stocks, making them suitable for short-term trading rather than long-term investment [2]. - The new launches cover various sectors, including technology, health care, energy, and materials, indicating a strong demand for targeted leverage on popular stocks [3]. - The lineup includes: - Leverage Shares 2X Long NIO Daily ETF (NASDAQ:NIOG) focused on Nio Inc [3] - Leverage Shares 2X Long SNAP Daily ETF (NASDAQ:SNAG) linked to Snap Inc [3] - Leverage Shares 2X Long BIDU Daily ETF (NASDAQ:BIDG) for Baidu Inc [4] - Leverage Shares 2X Long CNC Daily ETF (NASDAQ:CNCG) tracking Centene Corp [4] - Leverage Shares 2X Long KLAC Daily ETF (NASDAQ:KLAG) associated with KLA Corp [4] - Leverage Shares 2X Long PBR Daily ETF (NASDAQ:PBRG) tied to Petrobras [5] - Leverage Shares 2X Long VALE Daily ETF (NASDAQ:VALG) focused on Vale SA [5]. Group 2: Market Positioning - All seven ETFs have an expense ratio of 0.75%, which is among the lowest in the single-stock leveraged ETF category, making them cost-efficient options for sophisticated traders and active retail investors [5]. - With these new additions, Leverage Shares by Themes now offers a total of 60 single-stock daily leveraged ETFs, reflecting the increasing demand for high-conviction, short-term trading instruments [6].

Core Insights - KLA Corp has forecasted second-quarter revenue that exceeds Wall Street estimates, driven by strong demand for its chipmaking tools linked to artificial intelligence [1] - The company has highlighted significant risks associated with its business operations in China [1] Revenue Forecast - The anticipated revenue for the second quarter is projected to be above market expectations, indicating robust growth potential in the semiconductor sector [1] - The demand for AI-related technologies is a key factor contributing to this positive outlook [1] Risks - KLA Corp has flagged considerable risks to its operations in China, which may impact future performance [1]

Core Insights - ASML Holding N.V. is the only manufacturer of extreme ultraviolet (EUV) lithography systems, essential for producing sub-4nm semiconductors that are critical for AI, data centers, and advanced consumer electronics [1][10] - The company expects a revenue growth of approximately 15% for the full year, driven by increasing demand for EUV technology in logic and DRAM segments, particularly for sub-3nm nodes [12][11] - ASML's total addressable market (TAM) is projected to exceed $1 trillion by 2030, with lithography tools accounting for €40-60 billion of annual equipment demand [13][14] Technology Overview - ASML's EUV platform utilizes 13.5nm wavelength light produced by tin plasma lasers, allowing for finer resolution and enabling next-generation chips for AI and quantum computing [4][5] - The company’s High-NA EUV systems provide up to 70% finer resolution compared to previous generations, with each machine costing over €350 million [4][10] - EUV systems are critical for advanced logic and memory applications, while DUV systems are still widely used for less critical layers in semiconductor manufacturing [8][9] Financial Outlook - ASML's earnings per share (EPS) estimates for 2025 have increased from $28.15 to $29.08, and next year's profit projection has risen from $29.15 to $30.14 [10] - The company anticipates maintaining a gross margin of around 52% as it capitalizes on the growing demand for EUV systems [11][12] - The global lithography equipment market is expected to grow from $27.8 billion in 2025 to approximately $43.7 billion by 2030, reflecting a compound annual growth rate (CAGR) of 6-8% [15] Market Dynamics - The semiconductor industry is projected to surpass $1 trillion in total sales by 2030, with ASML positioned as a key player due to its monopoly in EUV technology [14][19] - AI-related data center, high-performance computing (HPC), and networking chips are expected to account for around 40% of semiconductor demand by 2030, significantly driving EUV system sales [16] - Bank of America has raised its forecast for global semiconductor sales to nearly $1 trillion by 2027, indicating a robust growth trajectory for the industry [17][18]

Summary of SEMICON West Conference Call Industry Overview - **Industry**: Semiconductor Capital Equipment - **Event**: SEMICON West Conference held in Arizona from October 7-9, 2025 - **General Sentiment**: The conference highlighted excitement about competition driving industry growth in Wafer Fabrication Equipment (WFE) and testing, but also a cautious outlook for December quarter earnings [1][2] Key Takeaways 1. **Memory Pricing vs Capex**: - Increased bullishness on memory WFE due to better pricing and stronger bit demand - Industry participants expressed skepticism about overly positive memory WFE outlook - Micron's FY26 capex guidance and Kioxia's Kitakami Fab2 operation start were cited as validations [2][2][2] 2. **Market Share Dynamics**: - Each company presented its own market share gain narrative, with notable mentions including TEL, SCREEN, AMAT, and Veeco/Axcelis - Anticipation of competition driving the industry forward [2][2] 3. **China Market Dynamics**: - New Chinese customers were significant for WFE in 2023-2024, but orders have slowed, particularly in mature logic - Leading-edge Chinese customers still show strength, with fierce competition noted in trailing-edge segments [2][2] 4. **Test Intensity**: - Teradyne and Advantest are competing for memory market share, with increased test insertions driven by a focus on yield and time to market - Expansion beyond mobile testing into new areas like HBM testing [2][2] 5. **Broader Growth Drivers**: - MKS and AEIS highlighted growth in segments outside semiconductors, particularly in PCB chemistry and data centers, benefiting from AI-related demand [2][2] Company-Specific Insights - **AEIS**: - Moderated WFE outlook due to softer trailing-edge logic demand but expects strong DRAM WFE market growth [6][6] - **Advantest**: - Focused on expanding offerings across the test value chain, leveraging AI for optimization [7][7] - **AMAT**: - Addressed concerns regarding China and GAA market share, emphasizing a timing issue for the $500 million miss in guidance [8][8] - **AMKR**: - Ground-breaking announcement for a new facility in Arizona with a $7 billion investment, aligned with TSMC [9][9] - **Lasertec**: - Noted growth in memory customers and increased inquiries from Chinese customers amid tighter restrictions [11][11] - **MKS**: - No indications of a significant ramp in memory demand, but optimistic about tool demand continuing to drive growth [12][12] - **SCREEN**: - Observed increasing cleaning intensity and cautious optimism for medium-term growth [13][13] - **Teradyne**: - Highlighted the importance of test coverage and announced new products to meet growing networking demands [14][15] - **Tokyo Electron (TEL)**: - Cautioned against over-optimism regarding memory prices and emphasized a focus on leading-edge customers [16][16] - **Veeco**: - Discussed the strategic merger with Axcelis to tackle AI-driven market demands [17][17] Additional Insights - **General Market Sentiment**: The conference underscored a cautious optimism regarding the semiconductor market, with varying dynamics in different segments and regions, particularly concerning China [2][2][2]

Buyback Announcements - A significant buyback of $5 billion was announced by a major company, adding to a long list of companies engaging in stock buybacks recently [1] - Uber announced a $20 billion buyback on August 6, while Charles Schwab announced a $20 billion buyback on July 24, which some view as a potential market catalyst [4][5] - The buyback trend is noted across various companies, with approximately 25% of companies in a growth portfolio having announced buybacks in the last couple of years [7] Company Performance and Strategy - Companies like Lamb and KLA Corp are favored not solely for their buybacks but for their involvement in the artificial intelligence infrastructure buildout, alongside major players like Nvidia and Broadcom [3] - Uber's strong free cash flow, projected at $9 billion this year and expected to rise to $10 billion and $12 billion in the following years, supports its buyback decision [5] - Charles Schwab's buyback is seen as surprising given its recent funding crisis, raising questions about its financial strategy [5][6] Market Implications - The buyback announcements are viewed as management signaling that they believe their shares are undervalued, rather than as direct catalysts for stock price increases [8][9] - There is a belief that the acceleration in buybacks reflects strong fundamentals of many companies, potentially leading to multiple expansions if the market continues to rise [12] - The financial sector may see buybacks as a more significant catalyst compared to other sectors, but the overall sentiment is that buybacks should not be the sole reason for investment decisions [10][12] Industry Trends - The gaming industry is highlighted with Electronic Arts experiencing a decline in shares, while Google integrates AI into its mobile games, indicating a competitive landscape [13] - Electronic Arts is noted for achieving an 80% profit margin and increasing free cash flow, showcasing strong financial health and active gamer engagement [14]

Summary of Semiconductor Capital Equipment Conference Call Industry Overview - The conference call focused on the **Semiconductor Capital Equipment** industry, particularly in **North America**. - The **2026 Wafer Fabrication Equipment (WFE)** market forecast has been revised from a growth of **5%** to **10%**, with the new forecast set at **$128 billion** compared to the previous **$122 billion** [1][4]. Key Companies Discussed 1. **Applied Materials Inc. (AMAT)** - Upgraded to **Overweight (OW)** with a new price target of **$209** from **$172**. - CY26 EPS forecast raised from **$9.58** to **$10.45**. - AMAT is expected to benefit significantly from DRAM growth, with a **3:1 bull:bear skew** in its favor [3][24][28]. 2. **Lam Research Corp (LAM)** - Upgraded to **Equal-weight (EW)** with a new price target of **$125** from **$92**. - CY26 EPS forecast increased from **$5.12** to **$5.43**. - Despite a positive outlook, LAM is expected to underperform WFE growth slightly [3][25][35]. 3. **KLA Corp (KLA)** - Downgraded to **Equal-weight (EW)** with a new price target of **$1,093** from **$928**. - CY26 EPS forecast raised from **$37.11** to **$39.03**. - KLA's valuation is at a **30% premium** compared to AMAT and LAM, making further premium expansion difficult [3][26][40]. Core Insights - **Memory Market Dynamics**: - The **memory WFE** forecast has been adjusted, with DRAM expected to reach **$34.9 billion** in 2026, reflecting an **18%** increase year-over-year, and NAND projected at **$13.8 billion**, a **35%** increase [9][13]. - Improved pricing conditions in both DRAM and NAND have been noted, with significant orders from hyperscalers driving demand [10][11]. - **Investment Trends**: - There is a shift in capital expenditure (capex) priorities towards DRAM, which may delay NAND capex improvements [2][17]. - The overall sentiment in the semiconductor capital equipment sector is cautiously optimistic, with risks skewed to the upside if major players like Intel and Samsung accelerate their foundry investments [2][11]. Additional Important Points - **Market Forecasts**: - The WFE revenue is expected to grow from **$117.171 billion** in 2025 to **$128.304 billion** in 2026, with a projected growth rate of **10%** [6]. - The semiconductor revenue is forecasted to increase from **$736.304 billion** in 2025 to **$809.193 billion** in 2026 [6]. - **Regional Insights**: - North America is projected to contribute **$12.830 billion** to the WFE market in 2026, maintaining a steady growth trajectory [8]. - **Valuation Metrics**: - AMAT currently trades at **18x CY26 MSe**, while LAM and KLA trade at **23x** and **27x**, respectively, indicating a valuation discount for AMAT that is expected to narrow as DRAM growth accelerates [28][32]. This summary encapsulates the key points discussed during the conference call, highlighting the revised forecasts, company-specific insights, and broader industry trends.