Memory Chip Stocks Rally as Analysts Forecast Supercycle Through 2028

TLDR

• UBS projects wafer fab equipment (WFE) sector revenue could reach $250 billion by 2028, signaling a potential supercycle
• Major chipmakers including Micron, Samsung, and SK Hynix are launching new fabrication facilities to address cleanroom capacity constraints
• Mizuho upgraded Sandisk’s price target to $2,200, while also raising projections for Seagate and Western Digital
• DRAM consumption expected to surge 27% year-over-year in 2026, primarily fueled by artificial intelligence workloads
• Google’s TPU deployments projected to surpass 35 million units by 2028, a dramatic increase from approximately 4.3 million in 2026

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The memory semiconductor sector is experiencing significant expansion, with major Wall Street analysts attributing the momentum to surging artificial intelligence demand.

Timothy Arcuri, an analyst at UBS, indicated this week that the wafer fab equipment sector — responsible for manufacturing the machinery that produces semiconductors — may be in the initial phases of a supercycle. His analysis suggests total WFE revenue could climb to $250 billion by 2028.

Arcuri’s forecast calls for WFE revenue to expand 27% during the current year, reaching $147 billion. He anticipates an additional 35% increase in 2027, bringing the total to approximately $200 billion.

The expansion is being driven by new fabrication capacity entering production. Micron, Samsung, and SK Hynix are all initiating operations at newly constructed manufacturing facilities. This wave of expansion is alleviating the shortage of cleanroom infrastructure necessary for chip production.

Micron Technology, Inc., MU

Equipment manufacturers are now receiving demand forecasts from customers extending up to eight quarters ahead. According to Arcuri, this unprecedented level of visibility represents something he hasn’t observed in nearly three decades of industry analysis.

Memory Equipment Investment Accelerates Sharply

Revenue from machinery dedicated to DRAM and NAND memory chip manufacturing is anticipated to jump 50% this year. Meanwhile, equipment for logic semiconductors, produced by firms such as Taiwan Semiconductor and Intel, is expected to increase by 12%.

UBS increased its memory WFE revenue projection for the coming year by $10.5 billion. A substantial portion of the new manufacturing capacity focuses on DRAM production, supported by extended supply contracts. NAND capacity expansion is anticipated to accelerate beginning in the latter half of 2028.

Arcuri indicated his preference for Lam Research and Applied Materials among equipment manufacturers. He considers KLA to be trading at elevated valuations that limit potential gains. Shares of both Applied Materials and KLA advanced on Tuesday despite weakness in the broader semiconductor sector.

ASML, the Netherlands-based producer of extreme ultraviolet lithography systems, is expected to generate over $46 billion in systems revenue next year — a figure Arcuri believes validates his broader WFE projections.

Mizuho Elevates Price Targets for Storage Leaders

In a separate development, Mizuho Securities increased its price objective for Sandisk to $2,200 from $1,825, maintaining an Outperform rating. The firm simultaneously raised Seagate’s target to $1,090 from $875 and boosted Western Digital’s objective to $685 from $550.

Mizuho’s Vijay Rakesh forecasts DRAM consumption will expand 27% year-over-year in 2026 and 24% in 2027. NAND consumption is projected to increase 18% in both years.

Shipments of Google’s Tensor Processing Units are anticipated to exceed 35 million units by 2028, rising sharply from around 4.3 million in 2026. Broadcom, serving as a critical design collaborator for Google’s TPU and OpenAI’s forthcoming processor, is projected to generate AI-related revenue of $122 billion in 2027 and $170 billion in 2028.

Sandisk commenced trading Monday at $1,982 and advanced approximately 5.69% in response to the analyst upgrade. The stock currently trades at a price-to-earnings ratio of 58.32 times, significantly exceeding its historical median of 29.61 times.

The PHLX Semiconductor Sector index has climbed 73% year-to-date despite a modest decline on Tuesday.

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