Applied Materials (AMAT) was in focus on Friday after Wall Street praised the semiconductor equipment maker’s guidance.
Shares rose 11% in premarket trading, while other chip equipment stocks, such as Lam Research (LRCX), ASML (ASML), and KLA Corp. (KLAC), were mixed.
Wells Fargo analyst Joe Quatrochi was impressed with the company’s guidance, especially given the rising expectations from its peers. “While not providing a C2026 [wafer fab equipment estimate], AMAT expects its semi systems rev to grow >20% y/y—well ahead of prior Street est at +11% y/y,” Quatrochi wrote in a note to clients. “Similar to peers, AMAT expects rev to be 2H-weighted given fab readiness & likely sets up for a strong 2027. AI [remains] a key driver of demand w/ WFE growth led by leading-edge F/L, DRAM / HBM [and advanced] packaging, while we’d positively view updated [expectations] for flat ICAPS & China; we think [this is] supportive of AMAT [wafer fab equipment] outperformance in 2026.”
Quatrochi has an Overweight rating and $435 price target on Applied Materials.
Evercore ISI analyst Mark Lipacis was also impressed and said he expects shares of Applied Materials to see the valuation gap between it and its peers—ASML, Lam Research, and KLA Corp.—narrow after the report.
“We expect this valuation gap to narrow, as WFE accelerates through 2027 and AMAT benefits from acceleration in DRAM + HBM and leading-edge F&L spend,” Lipacis wrote in a note to clients. He has an Outperform rating and a $400 price target on Applied Materials.
Bank of America analyst Vivek Arya was even more positive and said it is now the “time to shine” for Applied Materials.
“As the largest semicap with the broadest portfolio, AMAT has strong leverage to this multi-year WFE cycle focused in leading-edge F/L and DRAM to support outsized AI demand,” Arya wrote in a note to clients. “Beyond cyclical growth, leadership in DRAM (#1 supplier), advanced packaging, and dep/conductor etch process steps are growth engines to drive through-cycle share gains (we estimate ~100bps gain in CY26). Notably, the incremental contribution to topline this year is virtually all ex-China as ICAPS/China sales are trending flat YoY.” Arya raised his price target on Applied Materials to $420 from $350 and reiterated his Buy rating.