Key Moments
- Wells Fargo set out its 2026 semiconductor outlook with a broad slate of stock upgrades across chips, memory, and equipment.
- AMD was designated the firm’s top pick, while Broadcom, Lam Research, KLA, Analog Devices, and Monolithic Power Systems all received Overweight ratings.
- The bank now projects 2026 semiconductor industry revenue of $1.02 trillion, a 29 percent year-over-year increase, supported by AI infrastructure spending.
Strategy Framework and Sector View
Wells Fargo issued a wide-ranging series of upgrades on semiconductor names as part of its outlook for 2026, stating that the industry remains positioned for additional upside even after strong year-to-date gains.
The firm said its conclusions are based on several key indicators, including AI demand signals, a token-driven supply and demand model, and forecasts for wafer-fab equipment (WFE). These elements shaped both its stock selection and its projections for the broader chip cycle.
AMD Named Top Idea; Broadcom Upgraded
Within the group, Wells Fargo selected Advanced Micro Devices (NASDAQ:AMD) as its preferred idea, citing an “expanding multi-GW MI450X pipeline, server CPU share gains, & embedded recovery.”
The bank also raised its rating on Broadcom (NASDAQ:AVGO) to Overweight and set a price target of $430. It argued that worries about Broadcom’s gross margins are “overdone” and highlighted “Google TPU upside + significant additional custom XPU ramps” as supportive drivers.
| Company | Ticker / Exchange | Wells Fargo View | Notable Details |
|---|---|---|---|
| Advanced Micro Devices | NASDAQ:AMD | Top pick | “expanding multi-GW MI450X pipeline, server CPU share gains, & embedded recovery” |
| Broadcom | NASDAQ:AVGO | Upgraded to Overweight | $430 price target; margin concerns “overdone” |
Memory “Super-cycle” and EPS Targets
Wells Fargo reiterated its constructive stance on what it described as a “memory super-cycle.” It said Micron is on pace to achieve “+$40/sh EPS,” while SanDisk is projected to reach “> $30/sh EPS.” The firm framed these earnings paths as consistent with its bullish view on the memory upcycle.
| Company | Segment | Wells Fargo Commentary |
|---|---|---|
| Micron | Memory | On track to “+$40/sh EPS” |
| SanDisk | Memory | Projected to move “to >$30/sh EPS” |
Equipment Makers: AMAT Leads, Lam and KLA Upgraded
In semiconductor capital equipment, Wells Fargo reaffirmed Applied Materials (NASDAQ:AMAT) as its “top semi cap pick in 2026.” At the same time, it raised Lam Research and KLA to Overweight, expanding its positive stance across the equipment space.
The bank acknowledged that the equipment group is “a consensus long,” but argued that for Applied Materials, tightening supply-demand conditions underpin “a WFE acceleration in 2027.” On that basis, it increased its estimates for AMAT by an average of 10 percent.
| Company | Segment | Wells Fargo View |
|---|---|---|
| Applied Materials | Semiconductor capital equipment | “top semi cap pick in 2026”; estimates raised by an average of 10 percent |
| Lam Research | Semiconductor capital equipment | Upgraded to Overweight |
| KLA | Semiconductor capital equipment | Upgraded to Overweight |
Analog Names Benefit From Improving Sentiment
Wells Fargo extended its constructive view to analog chipmakers, lifting both Analog Devices and Monolithic Power Systems to Overweight. The firm said sentiment in this part of the market is starting to improve, supported by “relatively easy y/y comps” and the possibility of inventory replenishment.
Industry Outlook: 2026 Revenue Target and AI Tailwinds
Wells Fargo now projects that semiconductor industry revenue in 2026 will reach $1.02 trillion, representing a 29 percent increase year over year. The firm expects AI infrastructure to be a central driver of long-term capital deployment, reinforcing its positive stance across high-performance computing, memory, and equipment.
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