UBS: Lam Research, Texas Instruments, and Western Digital Expected to Deliver Strong Q3 Earnings
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UBS analyst Timothy Arcuri expects Lam Research, Texas Instruments, and Western Digital to beat expectations this week, with AI capital spending as the shared upside driver — though Western Digital's price target was cut.
Why is Lam Research's report called "extremely strong"?
UBS forecasts Lam's October 21 results will be "very strong" and guidance "even more impressive." This means → the market's focus is not the quarter itself but capacity expansion plans and margin trajectory.
Key dynamic: semiconductor equipment firms are pre-ordering all available capacity from subsystem suppliers. Channel checks show suppliers were told to prepare for ±10% swings in next-quarter wafer-fab equipment shipments. In plain terms = equipment makers are stockpiling parts — downstream demand is hotter than the headline numbers suggest.
UBS also cites UCT's (Ultra Clean Holdings) strong product-growth guidance as a leading indicator for Lam's results.
What forward signals might Lam's management send?
Analysts expect management to raise the 2026 wafer-fab equipment spending forecast above $150 billion and signal "increasing optimism" into 2027 and even 2028.
UBS believes Lam may hint at a third manufacturing site — the company announced a second site last quarter and has expanded several labs in recent months. This reflects equipment makers making tangible capacity commitments for a multi-year AI capex cycle.
UBS maintains a Buy rating with a $435 price target.
Why should TI's Q4 guidance beat seasonality?
UBS expects Texas Instruments' Q3 revenue and EPS near the top of guidance — roughly $6.05 billion and $2.48, respectively.
Q4 guidance is projected at roughly a 4% sequential decline, better than the typical 5%–7% seasonal drop. That implies revenue of about $5.8–5.9 billion, above the Street consensus of roughly $5.7 billion. This means → Wall Street's Q4 estimate sits only about 200 basis points above long-term seasonality, leaving room for an upside surprise.
UBS notes rising customer concern over supply shortages. Texas Instruments' strong manufacturing footprint positions it to gain share in analog chips. Rating: Buy; price target: $380.
Why was Western Digital's target cut?
UBS expects Western Digital's October 22 results and guidance to beat expectations — the company runs a "build-to-order" model, so quarterly shipments are largely locked in advance.
Yet UBS is structurally cautious on hard-disk drives: Western Digital, Seagate, and Toshiba have all begun sourcing read/write heads from TDK externally. This means → the narrative that "no new capacity is coming and prices will keep rising" is breaking down.
UBS keeps a Neutral rating but cuts the price target from $525 to $470, forecasting an industry downturn in late 2028 to early 2029. The key question this earnings call must answer: can Western Digital offer evidence strong enough to reset the market's structural view?
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