Morgan Stanley: Are We Headed to 30% WFE Growth ($150bn)? Probably. ASMI's JunQ Guides the Way
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Morgan Stanley raised its 2026 wafer fabrication equipment (WFE) spending forecast from US$135 billion to US$140 billion, representing year-over-year growth of 23% to 27%. The firm suggests that WFE growth could realistically reach 30%, pushing total spending to US$150 billion. This optimism is driven by ASM International's strong June quarter guidance, which exceeded market expectations by 10%, alongside robust performance from Lam Research.
DRAM serves as the primary growth engine. Lam Research reported March quarter DRAM revenue of US$1 billion, representing a 30% increase from the December 2025 peak. Consequently, Morgan Stanley upgraded its 2026 DRAM WFE forecast from US$41.7 billion to US$47.1 billion, marking 50% year-over-year growth. While NAND shipments missed expectations for the second consecutive quarter, management expects a recovery in NAND investment throughout the year.
Furthermore, a US$40 billion upgrade opportunity could be pulled forward into the 2025-2027 period. Driven by strength across DRAM, logic, and advanced packaging, Lam Research's system shipment growth forecast was revised upward from 31% to 38%. The company's 2026 EPS estimate was raised to US$5.72, and the 2027 EPS estimate to US$8.27. Morgan Stanley maintains an Equal-weight rating on Lam Research but increased the target price from US$260 to US$293, based on 31x 2027 non-GAAP EPS.