Key Takeaways
- Ultra Clean shares rose 7% today after record third-quarter revenue of $759 million, up 49% from a year earlier.
- CEO James Xiao expects 2027 wafer fab equipment spending above $200 billion, and the company guided fourth-quarter revenue to $800 million to $860 million.
- The main risk is inventory, which has nearly doubled this year as Ultra Clean stocks up ahead of demand.
- The stock trades at about 10x forward earnings, roughly half its five-year average of 20x.
Ultra Clean Holdings (UCTT) shares are up 7% today, trading at about $55. The chip-equipment supplier reported a record quarter after Tuesday’s close and put a big number on next year’s industry spending.
Revenue for the third quarter, which ended Sept. 25, hit a record $759 million. That’s up 49% from a year earlier and above the $700 million to $750 million the company guided to in August. Non-GAAP EPS came in at $1.15, against $0.24 a year ago.
CFO Mike Keogh said on the Q3 2026 earnings call that growth came mainly from etch and deposition tools supporting gate-all-around chips and high-bandwidth memory. CEO James Xiao went further:
“Based on the visibility our customers are sharing with us, we now expect 2027 wafer fab equipment spending to be above $200 billion.”
Analysts Already See a Bigger 2027
Ultra Clean guided fourth-quarter revenue to $800 million to $860 million. Analysts expect revenue to jump about 41% in 2027, to $3.87 billion:
The low end of that fourth-quarter range alone gets 2026 to the $2.74 billion consensus, so these numbers have more room to rise than fall.
TIKR Tracks 6 Analysts on Ultra Clean Holdings. How Many Say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Ultra Clean Holdings, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Ultra Clean Holdings’ Analyst Ratings
Ultra Clean Still Looks Cheap After the Jump
Margins are still thin. GAAP gross margin was 16.9% last quarter, below 2021’s 20.5%. On a non-GAAP basis it was 17.3%, and Keogh sees a path to 20% at about $4 billion of revenue. Costs are barely growing with sales: operating expenses rose 4% while revenue rose 49%, lifting GAAP operating margin to 7.1% from 2.1%.
The bigger risk is inventory. It has nearly doubled since the end of 2025, to $723 million, as Ultra Clean pre-orders critical parts and holds more safety stock. That build is why it didn’t miss a shipment last quarter, even with a shortage of mass flow controllers that Xiao expects to last another quarter or two. It also pushed operating cash flow to negative $117 million over the first nine months.
The market still isn’t paying up. Ultra Clean traded at 9.4x forward earnings at Tuesday’s close, less than half its five-year average of 20x:
Even after today’s move, it’s about 10x.
At that multiple, a $200 billion spending year looks barely priced in, and Xiao said customers’ calls suggest 2028 is “more or less booked.” The catch is that cyclical stocks look cheapest near the top, and Ultra Clean’s two largest customers made up 61% of third-quarter revenue. The fourth-quarter report will show whether orders keep pace with that inventory, which decides whether 10x is a bargain or a warning.
So what is Ultra Clean stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
