Jefferies: Semiconductor Equipment Market Growth Expected to Continue Through 2028
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Jefferies projects the semiconductor equipment market will keep expanding through 2028, with wafer fab equipment spending reaching roughly $220 billion — yet that figure may still trail Wall Street consensus, signaling the Street's expectations could be too high.
What is the market actually worried about?
Jefferies notes that chip companies are more upbeat on fundamentals when reporting quarterly results, yet stock prices are moving the other way — the gap between earnings reality and share-price expectations keeps widening.
Four main concerns: whether hyperscaler capex is sustainable, power-supply bottlenecks delaying data-center builds, financial interconnections among major AI companies, and memory-chip prices sitting at levels that may not hold.
This means → the problem is not deteriorating fundamentals — investors are pre-pricing a "what if growth slows" scenario.
What underpins the "growth through 2028" call?
Jefferies expects continued AI adoption to sustain demand for GPUs, custom chips, CPUs, power semiconductors, and other data-center components; memory-chip demand should also keep growing.
The key anchor: chip companies have locked in long-term supply agreements with customers, improving mid-term demand visibility — equipment makers cite these contracts as the basis for expecting growth through 2028.
In plain terms = customers have already committed orders years ahead; equipment firms are reading signed contracts, not guessing.
What signal is hiding in the market-size forecast?
Jefferies sees wafer fab equipment (WFE) spending reaching up to $200 billion by 2027 and roughly $220 billion by 2028.
But the firm warns: investors expect $200 billion and $250 billion for those two years, respectively — This means → consensus may be overshooting by about $30 billion, especially for 2028.
This reflects a Street that may be too excited about AI-driven equipment demand — and Jefferies is actively cooling that enthusiasm.
Who does Jefferies favor — and who gets a neutral call?
Buy ratings: Applied Materials, Lam Research, Nvidia, CoreWeave, Meta, Microsoft, and Amazon — spanning the full chain from equipment manufacturing to AI compute to cloud services.
Hold ratings: ASML and SCREEN Holdings — In plain terms = not bearish, but Jefferies believes current share prices already reflect growth expectations, leaving limited near-term upside.
Jefferies flags upcoming quarterly earnings as the critical checkpoint for whether this equipment upcycle can truly sustain — the data will tell.
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