Goldman Sachs Raises Target Prices for 10 Japanese Semiconductor Equipment Stocks by 16%
Alina Collins
Goldman Sachs raised price targets on 10 Japanese semiconductor-equipment companies by an average of 16%, but warned the stocks have already rallied 65% year-to-date — the next leg depends not on industry tailwinds but on whether individual companies can beat earnings expectations.
After a 65% rally, what drives the next move?
These 10 stocks have gained an average of 65% year-to-date, far outpacing TOPIX's 17% rise. Valuations sit above historical ranges.
This means → the phase where stocks could ride higher simply on industry-wide multiple expansion is largely over.
Goldman's new framework is explicit: what matters now is whether each company's revenue can outgrow the sector average, and whether that revenue growth translates into real margin improvement.
WFE growing 32% — what does this number actually tell us?
Goldman forecasts the global wafer-fab equipment (WFE) market — the full suite of machines needed to manufacture chips — will grow 32% year-on-year by CY27, accelerating from CY26.
The core driver is rising capex from memory makers like Samsung and Micron — in plain terms = these giants plan to spend significantly more on equipment.
But Goldman stresses: a WFE upgrade is no longer scarce information; the market has already priced it in. Put simply = knowing "the industry pie is growing" is not enough — what matters is who captures a bigger slice and who turns that slice into actual profit.
Four stocks rated Buy — why these four?
Lasertec: target raised from ¥55,000 to ¥67,000. Goldman calls it the most direct "technical-bottleneck asset" in leading-edge node inspection — in plain terms = the more advanced the chip, the harder it is to inspect without Lasertec's tools, and alternatives are scarce.
Disco: makes dicing, grinding, and polishing equipment. Once a cyclical business, it has become an AI-process bottleneck as advanced packaging — assembling multiple chips tightly together — takes off.
Ebara offers relatively clear earnings-guidance upside from its precision-machinery unit. Tokyo Electron has the widest product line plus equipment price hikes, giving it the broadest WFE exposure among Japanese peers.
Neutral and Sell names — where is the problem?
Kokusai Electric: Goldman's FY3/27 operating-profit forecast of ¥70.1 billion sits well above the company's own guidance of ¥54.5 billion, suggesting room for an upgrade — but the stock has already priced this in. Kokusai's heavy exposure to NAND tools and high-margin mini-batch deposition systems is a mismatch when current capex skews toward DRAM and HBM, pushing the risk-reward back to neutral.
Tokyo Seimitsu and SCREEN HD keep Sell ratings. Tokyo Seimitsu faces high customer concentration in HBM probe-card business and OSAT competition in logic probing. SCREEN may raise guidance in H2, but margin improvement is capped by customer mix and fixed costs.
This reflects a common theme: revenue growth does not equal profit growth — fixed costs, competition, and customer-mix shifts can consume the top-line gains.
What are the four checkpoints to watch next?
Goldman lays out four conditions that must hold simultaneously for the rally to continue:
① CY27 WFE growth near 32%; ② memory-maker capex broadening from HBM into DRAM and NAND; ③ Japanese equipment companies posting FY27–FY28 earnings above consensus; ④ order growth converting into operating-margin expansion rather than being absorbed by fixed costs, delivery delays, competition, or shifts in the China customer base.
In plain terms = an industry upcycle is necessary but not sufficient — remove any one of the four pillars and the foundation of this rally becomes unstable.
Content is for reference only, not financial advice.