Investing.com - Shares of KLA Corporation (NASDAQ:KLAC) and Applied Materials Inc (NASDAQ:AMAT) experienced a significant uptick on Wednesday, gaining 4.6% and 5.3% respectively after Barclays (LON:BARC) upgraded the stocks to equal-weight before the market opened.
In the analyst note, the firm explained that its initial thesis predicted a cyclical correction for semiconductor capital equipment similar to semiconductors post-pandemic.
However, a notable increase in China's spending and aggressive capital expenditure plans at the trailing edge in the US have offset some of that decline. This trend bridges the gap to a more favorable environment in calendar year 2025 and beyond.
Barclays now anticipates year-on-year growth in China's spending in CY24. Looking ahead to 2025, the firm identifies 2nm, HBM, and capacity buildouts in DRAM as likely growth sources in wafer fab equipment.
The firm upgraded its price target for KLA Corporation from 630 to 765, while Applied Materials was upgraded from 165 to 225.