The semiconductor sector is once again drawing heavy buy-side and sell-side attention, with equipment makers such as KLA Corp, Lam Research, and Applied Materials (AMAT) all benefiting from fresh analyst optimism. A notable Citigroup note issued that morning helped fuel the move, but the bullishness was far broader than a single firm's call.
Micron at the Center of the Memory Story
Micron stands out as the dominant name in this rally. Its shares moved higher in early trade as multiple banks lifted their price targets simultaneously. Citigroup grew more constructive, raising its target to $1,200, while Deutsche Bank went even higher, setting its target at $1,500. The unifying thesis behind these upgrades is straightforward: there simply is not enough DRAM memory supply to meet surging AI demand.
This supply-demand imbalance is the central theme. Analysts now believe the shortages could extend well beyond the current year and potentially stretch into 2028. The demand source is well understood — it is coming from data centers, specifically AI data centers, and from the explosive growth occurring within them.
Broad Price Target Increases Across Equipment Makers
Citigroup's revised targets reflect this conviction across the supply chain. The firm boosted its KLA Corp target to $290, AMAT to $710, and Lam Research to $450. The tone across the board is decidedly bullish, with a growing chorus of analysts becoming more constructive on these names even after their substantial gains this year.
Performance Despite Cyclicality Concerns
The strength in these stocks has already been remarkable. Micron is up more than 200% so far this year and more than 700% on a year-over-year basis. AMAT has gained more than 100% year-to-date and over 200% year-over-year. Lam Research is similarly up more than 100% this year and more than 300% on a year-over-year basis.
One important caveat is acknowledged: names like Micron are often viewed as cyclical, meaning they can rise quickly and fall just as fast, particularly given the cyclical nature of the memory space. Yet, despite this, analysts and investors remain clearly on board with the current boom. The investment framing is the classic "picks and shovels" approach — these companies are seen as living strongly within the AI demand story by supplying the essential tools and components, rather than being bet on as speculative end-products.
Jabil Surges on AI Infrastructure Strength and Raised Guidance
Jabil shares jumped roughly 9.5% right out of the gate, driven by an earnings report that highlighted solid demand.
A key question raised was: how much of this earnings story is about AI data center momentum versus broader electronics strength? The answer is that AI is the major growth driver, with AI infrastructure representing the biggest story in the report — though broader supply-chain strength also contributes.
The Numbers
Jabil beat expectations on both the top and bottom lines. Earnings came in at $3.16 per share, ahead of the $3.10 the street was looking for. Revenue jumped 12% year-over-year to nearly $8.8 billion (specifically $8.75 billion), surpassing the consensus estimate of a touch above $8.6 billion.
AI Infrastructure as the Core Driver
The company helps manufacture and assemble components used throughout the technology supply chain, positioning it as a key beneficiary of the ongoing AI build-out. Management stated that AI-related demand remains extremely strong, and crucially, they increased their outlook for AI-driven revenue guidance.
A Guidance Story, Not Just a Quarter
This was emphasized as much a guidance story as a quarterly beat. For the fourth quarter, Jabil expects earnings between $3.80 and $4.20 per share, with revenue projected between $9.2 billion and $10 billion — an increase from prior levels. Strong guidance matters because it speaks not only to what already happened but to what is still to come. The result is a double-digit share gain that built throughout the session, adding to the momentum the stock has shown this year. Jabil is now up more than 100% on a year-over-year basis.
La-Z-Boy Rips Higher on a Surprising Big-Ticket Beat
In a completely different category of earnings, La-Z-Boy delivered a striking result, with shares surging nearly 26% right out of the gate.
The natural questions were what this tells us about the health of the consumer and big-ticket home spending, and what to make of the report overall. The result was genuinely surprising, especially because furniture represents big-ticket discretionary spending — exactly the category one might expect to weaken. Instead, it reinforced the principle of never underestimating the strength of the American consumer, particularly the consumer who has a job.
The Numbers and the Weather Worry That Never Materialized
La-Z-Boy beat handily. Adjusted earnings per share came in at $1.26, far above the $0.82 the street expected — a big beat. Revenue topped $570.3 million, beating on both the top and bottom lines.
There had been worries heading into the report because management had previously warned that severe weather might hurt sales and numbers. That headwind did not materialize; consumers still came in and bought the chairs and other furniture.
Retail Expansion and "Playing Offense"
A major part of the story is the company's retail strategy. The CEO described the firm as "playing offense" through retail expansion. La-Z-Boy now owns 230 stores across North America and is increasing that ownership, which gives it greater control over pricing.
For the current quarter, the company projected revenue between $490 million and $510 million. The street clearly liked the numbers, producing a roughly 25% pop that lifted the stock higher both for the year and on a year-over-year basis. The takeaway is that the company appears to be turning the corner, though it remains to be seen whether the momentum will hold through the balance of the year. Historically, the name has always recovered, supporting hopes that this represents a more durable, longer-term recovery rather than a one-off move.
