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Barclays upgrade boosts KLA, Applied Materials amid China spend growth

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.

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The firm upgraded its price target for KLA Corporation from 630 to 765, while Applied Materials was upgraded from 165 to 225.

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