Applied Materials (AMAT) shares rose 0.8% in premarket trading on Friday as Deutsche Bank became the latest Wall Street firm to upgrade the semiconductor equipment maker.
“With this note, we are raising our estimates for AMAT to reflect a much more constructive [wafer fab equipment] environment entering 2026 and 2027,” analyst Melissa Weathers wrote in a note to clients. “Our out-year estimates now stand ~10% above Street, with potential upside risk. In addition, we view the [company’s] current discount valuation to semicap peers as overdone, and see potential for this valuation gap to shrink going forward. The start of 2026 has been dominated by ever-strengthening trends in the [wafer fab equipment] market.”
Weathers raised her rating on Applied Materials to Buy from Neutral and put a $390 price target on the stock.
Delving deeper, Weathers said the fact that both Taiwan Semiconductor (TSM) and Intel (INTC) will both increase spending is a positive sign for the chip equipment market. She also noted that memory sellers are “accelerating” the construction and expansion of new DRAM fabs, which should drive DRAM wafer fab equipment spending higher in the medium term.
“All in, we believe these dynamics should result in structural tailwinds for all of the large-cap semiconductor equipment companies – especially AMAT, given its diversified [wafer fab equipment] exposure across end markets,” Weathers added.
Earlier this month, Susquehanna, and Barclays both upgraded Applied Materials, while KeyBanc raised its price target on the stock.