Price Target Increase#
Morgan Stanley has raised its price target for Applied Materials Inc. (NASDAQ:AMAT) from $432 to $454. This new target suggests a potential increase of about 16% from the current stock price of $391.38. However, some analyses indicate that the stock might be overvalued at this level.
Revenue and Earnings Forecasts#
The firm has also updated its revenue and earnings forecasts for Applied Materials. For the calendar year 2026, they now expect revenue to reach $34.7 billion and earnings per share (EPS) of $12.63, up from previous estimates of $33.5 billion and $12.02 per share. For 2027, the forecasts have been raised to $42.4 billion in revenue and $16.21 per share, compared to earlier predictions of $40.8 billion and $15.43 per share. To put this in perspective, the company reported $28.21 billion in revenue and an EPS of $9.76 over the last twelve months.
Bullish Outlook on DRAM#
Morgan Stanley's analysis indicates that a positive outlook for Applied Materials is closely tied to the performance of DRAM (Dynamic Random Access Memory) and Micron Technology. The firm maintains a bullish perspective on both, suggesting confidence in the growth of these sectors.
Recent Developments#
In recent news, Wolfe Research has also raised its price target for Applied Materials to $500, highlighting the company's strong position in the DRAM market, which is expected to be its fastest-growing segment by 2026. Additionally, Applied Materials has launched two new chipmaking systems aimed at advanced logic chip production, already in use by major manufacturers.
However, the semiconductor industry has faced challenges, including a decline in shares due to new U.S. restrictions on tool shipments to China’s Hua Hong, aimed at limiting advanced chip production. This has contributed to a broader selloff in the sector, with Applied Materials' stock dropping by 3.4%. Meanwhile, Bank of America has raised its estimates for wafer fabrication equipment, projecting strong demand through 2026.