Applied Materials (AMAT) shares rose 2% in premarket trading on Tuesday as UBS upgraded the semiconductor equipment firm to Buy, citing the recent strength in the memory business.
“We are upgrading Applied Materials (AMAT) to Buy and raising our price target to $285 from $250, reflecting a significantly more bullish outlook for wafer fab equipment in C2026/2027E,” UBS analyst Timothy Arcuri wrote in a note to clients. “Our revised forecast calls for 2026 [wafer fab equipment] to increase more than 20% Y/Y to $136.5B, driven primarily by memory. We now expect DRAM [wafer fab equipment] to rise by ~$13B Y/Y (vs. our prior [estimates] of ~$9B), accounting for more than half of the anticipated ~$25B increase in total [wafer fab equipment]. Looking ahead to 2027, we believe [wafer fab equipment] approaches $145B, a level well above current Street expectations.”
Delving deeper, Arcuri, who also upped his price target to $285 from $230, said he believes that Applied Materials is likely the biggest beneficiary of the rise in dynamic random access memory spending among the chip equipment makers.
“In addition, we believe the company — and the broader industry — is underestimating the strength of China’s [wafer fab equipment] demand in 2026, which we view as another source of upside and a meaningful tailwind for AMAT,” Arcuri added. “Based on these dynamics, we now forecast 2027 EPS of ~$13, compared to the Street at $11.56, which we believe supports a substantially higher share price.”