Goldman Sachs Maintains Buy Rating on ACMR with $83.8 Target Price
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Goldman Sachs Maintains Buy Rating on ACMR with $83.8 Target Price
Recovery in cleaning tool demand, new product ramp-up driving growth, continuous gross margin improvement
- 1Q26 cleaning tool revenue YoY -6%, but shipment volume grew, expecting delivery of 15-20 single-wafer SPM cleaning tools by end of 2026
- Gross margin improved to 46.5% (1Q26), driven by product mix optimization and higher contribution from advanced products
- First SiCN system for PECVD delivered for customer validation; Track tools to commence mass production qualification in 2026
- Maintain Buy rating with $83.8 target price (based on 29x 2027E P/E)
- Risks: Intensified competition, R&D delays, supply chain disruptions, US-China trade tensions
Report interpretation
Overview
Goldman Sachs conducted a follow-up call with ACM Research's CEO post Q1 earnings, focusing on cleaning tool growth prospects, gross margin outlook, and new product progress. Management expressed optimism about shipment growth and product portfolio upgrade to high-performance advanced tools, with continued development of differentiated innovative products to meet customer needs. Goldman maintains Buy rating, believing product expansion (Track/PECVD/panel-level packaging) will contribute incremental revenue in China and overseas markets.
Core views
Regarding cleaning tool growth, 1Q26 revenue YoY -6%, but management emphasized shipment growth, expecting delivery of 15-20 single-wafer SPM cleaning tools to customers by end of 2026, with sequential revenue improvement. On technical performance, cleaning tools achieved particle counts below 15 at 15nm node, meeting advanced logic and memory customer requirements. Significant gross margin improvement to 46.5% in 1Q26 (vs 42.0%/40.9% in 3Q/4Q25), primarily due to higher revenue share from advanced products. Management maintains 42%-48% gross margin guidance, with quarterly fluctuations dependent on product mix, as the company migrates toward higher-margin new products and advanced tools. New product progress remains on track: first SiCN system for PECVD delivered for customer validation, featuring three-station rotating architecture for film uniformity; Track tools delivered high-throughput 300wPH KrF equipment for validation, with mass production qualification expected in 2026. New products will contribute incremental revenue in 2026 and beyond.
Analysis framework
Goldman's analysis centers on product portfolio upgrade, technology validation progress, and gross margin drivers. First, validating demand recovery through cleaning tool shipment volume and technical metrics (e.g., particle counts); second, using sequential gross margin improvement data to support the thesis of increasing advanced product share; finally, assessing new product ramp-up timing through PECVD/Track tool validation progress. Valuation uses 29x 2027E P/E, reflecting growth potential and industry position.
Methodology notes
Target price set based on 29x 2027E P/E
Applying industry-appropriate valuation multiple to future earnings expectations, reflecting company growth potential and market position, suitable for high-growth semiconductor equipment firms
New product progression from validation to mass production
Judging transition timing from introduction to growth phase through customer validation and mass production qualification progress of PECVD/Track tools
Gross margin improvement driven by product mix optimization
Higher advanced product share directly drives sequential gross margin improvement, validating effectiveness of product upgrade strategy
Key data
- 1Q26 Cleaning Tool Revenue YoY-6%Shipment growth but short-term revenue pressure
- 1Q26 Gross Margin46.5%Significant improvement vs 42.0%/40.9% in 3Q/4Q25
- Cleaning Tool Delivery by End-202615-20 unitsSingle-wafer SPM cleaning tools
- Target Price Valuation Multiple29.0x 2027E P/EReflecting growth potential and industry position
- Current Price Implied Upside40.0%Based on $59.85 current price
Impact & implications
The report believes ACMR's product upgrades and new tool ramp-up will solidify its differentiated advantages in cleaning equipment, especially among advanced logic and memory customers. Continuous gross margin improvement validates the effectiveness of advanced product strategy, with growth curve expected to steepen further post 2026 new product revenue contribution. Expansion capability in China and overseas markets is key to long-term growth.
Risks
- Stronger-than-expected cleaning equipment competition
- New tool and technology R&D delays impacting market share
- Supply chain risks from reliance on overseas suppliers for critical components
- US-China trade tensions
What to watch
- Cleaning tool delivery progress by end-2026
- PECVD/Track tool mass production qualification progress
- Whether gross margin remains at upper end of guidance range