Applied Materials (AMAT) had fallen 7% by early trading on Friday due to weak near-term growth revealed in its latest financial results, but analysts remain positive on its long-term position as revenue is slated to begin accelerating in the second half of 2026.
One upside for Applied Materials stems from the U.S. Bureau of Industry and Security recently suspending an export rule affecting Applied Materials’ exports to China for one year.
“Applied previously guided for the new U.S. BIS rules to reduce F4Q revenue by $110M and FY26 by $600M (roughly $150M/Q),” said Stifel analysts in a Friday investor note. “Earlier this week, the U.S. suspended those rules (for 1-yr, as a concession for bi-lateral trade negotiations with China), and Applied now expects the $110M that did not ship in F4Q to revenue in F1Q.”
Stifel maintained its Buy rating and $250 price target following the financial results and outlook.
“While China is still expected to be a headwind in FY26, Applied was the first semicap to call for and see a slowdown in China,” Stifel added. “Especially given the about-face on the prior China restrictions, we are optimistic that quarterly China sales could stabilize sooner rather than later.”
Similarly, Needham reiterated its Buy rating and $260 price target on the stock.
“Management noted that customer visibility has significantly improved vs. a quarter ago, and now expects CY26 to be a growth year, 2H weighted, with leading-edge foundry/logic the top grower, followed by DRAM, while China and ICAPS are expected to be down,” said Needham analysts Charles Shi and Denis Pyatchanin in a note. “Management sees WFE mix has been unfavorable in ’25, which has led to underperformance, but should become much more favorable in ’26.”
Meanwhile, KeyBanc maintained its Overweight rating and $240 price target.
“In short, AMAT is not indicating material systems growth until C2H26, with strength from DRAM and Leading-edge Logic offsetting digestion in ICAPS capacity adds, particularly in China, while the now more streamlined AGS segment returns to DD growth,” said KeyBanc analysts, led by Steve Barger, in a note. “That said, we think AMAT sounded confident in its positioning to win in its targeted growth markets, and we remain positive on the relative play vs. peers YTD.”
KeyBanc also nudged up its earnings per share estimate for the full year of 2026 to $9.72 from $9.67 and 2027 up to $10.91 from $10.86.
Finally, Bank of America reiterated its Buy rating and $250 price objective.
“AMAT shared that customer conversations suggested a sharp acceleration in WFE in C2H’26 (so FQ4’26/FQ1’27), but that C1H is flattish HoH with C2H’25,” said BofA analysts, led by Vivek Arya, in a note. “While this implies that FY26 will see limited sales growth, this is also the same linearity that peers LRCX & KLAC are observing next year. Further, with China now normalizing to 29% of sales, we think mix should begin to favor AMAT as the upcoming ramp should be skewed towards DRAM (leading WFE share) and leading-edge foundry/logic (on track to capture >50% of SAM). So, after being left behind in CY25, we are still optimistic that AMAT should return to WFE+ growth in the medium-term.”
Applied Materials’ competitors Lam Research (LRCX) and ASML Holding (ASML) were both down about 3% on Friday morning.