TL;DR
· Market reports say Citigroup expects a global WFE bull market scenario could rise to $250 billion by 2028.
· TSMC, Samsung, and Intel account for about 55% of global WFE spending in 2025, and earnings guidance will determine how much room there is to raise the outlook.
· Gains for equipment stocks still depend on the durability of AI demand, the execution of Samsung’s investment, and Intel’s foundry progress.

TSMC, Intel, and Samsung will disclose their Q2 results in mid-to-late July one after another, and semiconductor equipment stocks are also facing a fresh test of capital expenditure expectations. According to market reports, ahead of the earnings season Citigroup continued to be bullish on wafer-fab equipment spending, believing that AI/HPC demand is boosting investment in advanced processes, memory, and foundry. For investors, WFE—wafer-fab equipment spending—covers key equipment purchases such as lithography, etching, deposition, and testing, directly impacting orders and revenue of equipment companies including Applied Materials, Lam Research, Teradyne, and AEIS.

The focus of the equipment cycle shifts from 2026 to the next two years

In the previous phase, semiconductor equipment stocks rose mainly due to investment expectations driven by AI servers, advanced packaging, HBM, and advanced logic process nodes. Now the market is asking whether capital expenditures can be revised upward starting in 2026, and continue to ramp meaningfully in 2027 and 2028.

According to market reports, Citigroup’s WFE bull market scenario calls for about $145 billion in 2026, about $200 billion in 2027, and about $250 billion in 2028. The broker report also shows that TSMC, Samsung, and Intel combined account for about 55% of global WFE spending in 2025. If the three companies maintain or increase their medium- to long-term capital expenditures, there will be further room for the equipment cycle to rise.

More direct clues will come from the next few earnings releases. TSMC will report on July 16, Intel will disclose results after market close on July 23. Samsung already released its Q2 earnings guidance on July 7 and will hold an earnings call on July 30 at 10:00 KST. The market will look not only at quarterly revenue and profits, but also closely at capital expenditure guidance, demand for advanced process nodes, the pacing of memory investment, and management’s comments on AI demand over the next three years.

The transmission chain for equipment companies is relatively clear. When wafer fabs increase capital expenditures, equipment companies’ orders and shipments benefit first. If demand remains tight, equipment makers also have opportunities to support gross margins through improving product mix and boosting capacity utilization. The equipment-related companies mentioned in the Citigroup report include Applied Materials, Lam Research, Teradyne, and AEIS, but the upside of these individual stocks still needs to return to the customer purchasing timetable.

TSMC is the strongest anchor, with 2027 clearly above consensus

TSMC remains the most critical player in this round of the AI capital expenditure cycle. During the April earnings call, TSMC confirmed that its 2026 capital expenditure guidance is $52 billion to $56 billion, and said spending is trending toward the high end of the range. The market expects the company will most likely keep its 2026 guidance in the upcoming earnings and continue to emphasize demand for advanced processes and advanced packaging.

The bigger watchpoint is in the next two years. Citigroup’s model shows TSMC’s capital expenditures at $75 billion in 2027 and $80 billion in 2028, corresponding to year-over-year growth rates of 36% and 7%, respectively. This assumption is above market consensus, especially the gap in 2027.

The core rationale behind this view is that AI/HPC demand continues to drive expansions of advanced process capacity. TSMC benefits from AI chip demand from NVIDIA, AMD, Broadcom, and others, and is also supported by advanced packaging, CoWoS, and migration to higher-end process nodes. As long as AI chip orders remain strong, TSMC has the motivation to continue purchasing more front-end and back-end equipment.

However, high capital expenditures do not automatically mean the equipment cycle is already locked in. Whether 2027 and 2028 can reach the optimistic model still depends on factors such as the continuity of AI orders, the pacing of customers’ in-house chip development, whether advanced packaging bottlenecks ease, and whether equipment delivery timelines can keep up.

Samsung and Intel bring incremental upside, but also uncertainty

If TSMC provides the baseline for the equipment cycle, Samsung and Intel determine the upside room.

At its April earnings call, Samsung said AI demand will drive a significant year-over-year increase in capital expenditures. Citigroup’s model shows that Samsung Semiconductor’s capital expenditures will still have high growth rates from 2026 to 2028. This includes two lines: HBM and high-end DRAM demand driving memory investment, while advanced logic and foundry business determine whether Samsung can continue to catch up to TSMC at higher-end process nodes.

Samsung’s long-term investment plan also amplifies the imagination for equipment demand. Public sources differ on the exact scope of the figures: Samsung’s press release and media reports separately cover different ranges such as the group’s total domestic investment, Samsung Electronics’ future business plan, and semiconductor cluster investments. A more prudent way to put it is that over the next decade-plus, Samsung’s Korea-based semiconductor-related investment is on the order of KRW 200 trillion or more. This long-term plan spans multiple years, and how much of it can translate into equipment purchases in the near term still depends on specific site construction, equipment installation timing, and the pace of capacity ramp-up.

Intel’s situation is even more complex. In its Q1 earnings call, the company changed its 2026 capital expenditure guidance from the previous “flat to down” to “flat,” and said tool- and equipment-related spending is expected to increase by about 25% year over year. In Citigroup’s model, Intel’s 2027 and 2028 capital expenditures still assume upside, with greater flexibility in 2028.

Whether Intel can deliver this incremental upside depends on its foundry business. 18A process validation, 14A customer decisions, and potential collaborations with large customers will all affect the strength of subsequent investment. If progress among advanced-process customers falls short of expectations, it will be difficult for capital expenditures to be released according to the optimistic scenario. If there is substantive progress in the foundry transition, Intel would become an important incremental source supporting the global WFE continued uptrend.

Micron validates memory demand, but cannot replace guidance from the three giants

Capital expenditures from memory makers are also providing validation for the equipment cycle. Micron has raised its FY2026 capital expenditure guidance to about $27 billion. The company also said that the level of capital expenditures in FY2027 is expected to be about $10 billion higher than the level of FY4Q26. If this quarterly level continues, Micron’s full-year FY2027 capital expenditures could exceed $40 billion.

This suggests that the AI-server-driven HBM, high-end DRAM, and storage demand is not only a story on the logic-process side. Memory capacity expansion will also drive equipment purchasing, especially benefiting deposition, etching, testing, and packaging-related steps. According to reports, Micron’s U.S. long-term investment plan has also been raised to more than $250 billion, with the time horizon extending to around 2035.

However, Micron is more of a supporting indicator for memory demand and cannot replace the guidance from TSMC, Samsung, and Intel. The three companies combined account for about 55% of global WFE spending in 2025; what truly determines the height of the equipment cycle is still what they say about their capital expenditures from 2026 to 2028 over the next few quarters.

The $250 billion assumption stalls after 2027

The biggest divergence in this earnings-season preview is that Citigroup’s assumptions for 2027 and 2028 are clearly more optimistic than the market’s. A revision upward for 2026 is relatively easier to understand—the AI demand is already reflected in orders and capacity expansion. After 2027, capital expenditures need to increase substantially further, requiring more conditions to be met at the same time.

AI/HPC demand needs to stay strong, and cannot just rely on short-term concentrated purchasing by cloud providers. TSMC’s advanced-process and advanced-packaging capacity expansion needs to continue receiving customer order support. Samsung’s large-scale long-term investment plan needs to translate into actual equipment spending, not remain limited to plant construction and long-term planning. Intel’s foundry business must also demonstrate that the 18A and 14A nodes have enough customers and meaningful prospects for mass production ramp-up.

Equipment delivery cycles, the macro environment, and semiconductor cycle volatility will also affect actual spending. Capital expenditure plans can be raised, but they may also be pushed back due to changes in customer demand, lower capacity utilization, or financing pressure.

The story for equipment stocks is still centered on the three major wafer fabs. If earnings continue to release strong signals on capital expenditures, the global WFE bull market scenario will gain further support. If management turns more cautious on 2027 and 2028, market expectations for $250 billion in equipment spending will need to be discounted. The current debate is not whether AI capital expenditures exist, but whether this round of expansion can carry beyond 2026.

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