Investing.com -- Bernstein raised its price targets on Lam Research and KLA Corp. on Wednesday after significantly upgrading its global wafer fabrication equipment spending forecasts, citing an improved outlook for memory expansion in China and beyond.

In a note, analyst David Dai lifted its 2026 WFE forecast to $148 billion, up 21.4% year-on-year, from a prior estimate of $141 billion.

The firm's 2027 forecast was raised to $175 billion from $158 billion, and its 2028 estimate climbed to $198 billion from $164 billion, putting $200 billion of WFE spending within sight.

The bulk of the increases were driven by memory, particularly DRAM. Bernstein revised up its 2027 DRAM WFE estimate by $3.4 billion, now forecasting 25% growth versus a prior estimate of 15%.

China was also a significant driver, with the firm revising China WFE demand higher by $2.3 billion, $6.7 billion and $16.1 billion across 2026 to 2028, citing expansion plans at YMTC and CXMT.

Bernstein raised its Lam Research price target to $340 from $325 and its KLA price target to $1,975 from $1,875, maintaining its $525 target on Applied Materials unchanged. All three stocks carry Outperform ratings.

The firm said it is "growing more positive on the idea that the current upcycle in equipment spending could be multi-year," adding that "WFE estimates have the potential to continue moving higher."

Among the three, Bernstein said it prefers Applied Materials first for its leading-edge logic and DRAM exposure, followed by Lam Research and then KLA.