Applied Materials Surges Over 5% on Morgan Stanley Upgrade
Analyst cites strong DRAM market outlook and raises price target to $209, signaling confidence in the semiconductor equipment sector.
Shares of Applied Materials (AMAT) jumped more than 5% in early trading after Morgan Stanley upgraded the semiconductor equipment giant to Overweight from Equal-Weight, citing a strengthening outlook for the memory market. The bank's analyst, Shane Brett, set a new price target of $209, a significant increase from the previous target of $172.
The bullish thesis is anchored in the company's significant leverage to the Dynamic Random-Access Memory (DRAM) market. highlighted an improved 2026 forecast for wafer fabrication equipment (WFE) sales, which are now expected to grow 10% year-over-year, double the firm's prior estimate. This projected growth is heavily concentrated in the memory segment, where Applied Materials is uniquely positioned for upside.
According to the analysis, Applied Materials holds the highest exposure to the DRAM greenfield market among its peers. The firm also believes that other potential headwinds, including pressures from China and demand in the ICAPS (IoT, Communications, Automotive, Power, Sensors) space, have been largely de-risked, clearing the path for future growth. The upgrade also pointed out that AMAT had been trading at a notable discount to its key competitor, Lam Research Corp. (LRCX), a valuation gap the new price target aims to narrow.
Reflecting this optimism, . This upgrade is a key development for investors, suggesting that the cyclical semiconductor industry may be entering a robust expansion phase, particularly in the memory sector. The move follows a period of intense focus on AI-driven logic chips, indicating a potential broadening of the rally to include critical memory and storage suppliers. Investors will now be watching to see if this renewed confidence in the WFE market prompts further .