Key insights
- Morgan Stanley raised its price target for Applied Materials (AMAT) based on a bullish DRAM outlook, projecting increased revenue and EPS through 2027. This positive revision, coupled with Wolfe Research's higher target, suggests continued strength in the semiconductor sector, particularly in DRAM-related areas. The analysis highlights AMAT's competitive positioning and expected growth, potentially driving positive sentiment in the broader tech market.
Investing.com - Morgan Stanley raised its price target on Applied Materials Inc. (NASDAQ:AMAT) to $454 from $432 while maintaining an Overweight rating on the stock. The new target suggests roughly 16% upside from the current price of $391.38, though InvestingPro analysis indicates the stock may be overvalued at current levels based on its Fair Value assessment.
The firm increased its calendar year 2026 forecast for Applied Materials to $34.7 billion in revenue and $12.63 in earnings per share, up from prior estimates of $33.5 billion and $12.02 per share. The calendar year 2027 forecast was raised to $42.4 billion in revenue and $16.21 per share from $40.8 billion and $15.43 per share. For context, the company generated $28.21 billion in revenue over the last twelve months with diluted EPS of $9.76.
Morgan Stanley’s quantitative analysis found that a bullish stance on Applied Materials correlates with a bullish view on DRAM and Micron Technology. The firm said it maintains a bullish outlook on DRAM and Micron.
The firm maintained its target multiple of 28 times earnings for Applied Materials, representing a 3-turn discount to Lam Research and a 5-turn discount to KLA Corporation.
Morgan Stanley said it viewed the January quarter results as a positive development and expects the current quarter’s results to represent another step forward. The stock has delivered a 153% return over the past year, reflecting strong investor confidence. For deeper analysis, investors can access a comprehensive Pro Research Report on AMAT, one of 1,400+ available on the platform.
In other recent news, Applied Materials Inc. has been in the spotlight with several significant developments. Wolfe Research raised its price target for Applied Materials to $500, citing strong competitive positioning in the DRAM sector, which the company expects to be its fastest-growing segment by 2026. Additionally, Applied Materials introduced two new chipmaking systems, the Precision Selective Nitride PECVD system and the Trillium ALD system, designed for manufacturing Gate-All-Around transistors at 2nm and smaller process nodes. These systems are already in use by leading foundry-logic manufacturers for advanced logic chip production.
In broader industry news, U.S. chip equipment makers, including Applied Materials, experienced a decline in shares following a report of new U.S. Department of Commerce restrictions on tool shipments to China’s second-largest chipmaker, Hua Hong. The restrictions are aimed at limiting the production of China’s most sophisticated chips. Furthermore, the semiconductor sector saw a selloff after OpenAI missed internal targets for weekly users and revenue, impacting stocks like Applied Materials, which fell by 3.4%.
Lastly, Bank of America raised its wafer fabrication equipment estimates, projecting robust demand and strong guidance through 2026, with forecasts reaching $140 billion for that year. The firm anticipates continued growth in the sector, with estimates for 2027 and 2028 also seeing significant increases.
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