TD Cowen increased the price target on Applied Materials’ (AMAT) stock to $315 from $260, while maintaining a Buy rating on the chip equipment maker.
“With -50% of the semis portfolio exposed to DRAM (non-China) and leading-edge Foundry, and given the potential for positive estimate revisions next year, AMAT is our best idea for 2026,” said analysts led by Krish Sankar.
DRAM and NAND are two different types of memories.
The analysts noted that for non-China DRAM Wafer Fab Equipment, or WFE, (about 30% of Applied Materials’ semi systems), they model 17% growth in 2026 and see upside potential to +20%.
The analysts added that while they see a scenario where NAND WFE might outgrow DRAM WFE over the next two years — since its starting from a much lower base — they think the intermediate term setup favors DRAM WFE as NAND suppliers remain adamant about not adding any capacity. On the other hand, the analysts see a line of sight for multiple greenfield projects in DRAM — Samsung Electronics’ (OTCPK:SSNLF) P4 mid-26; Micron Technology’s (MU) Idaho; and SK hynix (OTCPK:HXSC.F) Yongin in 2027.
“For leading-edge Foundry, we model 15% growth in C26 that is second half weighted. It’s early to pinpoint a growth number for C27, but checks indicate that it will be a stronger investment year (capacity is at full utilization today with multiple cleanroom projects coming online at TSM, Samsung/Tesla deal a tailwind as well),” said Sankar and his team.
Shares of Applied Materials rose about 1% on Thursday.