- KeyBanc raised Applied Materials’ price target to $380 from $285 and reiterated Overweight on stronger AI-driven wafer fab equipment demand, especially in DRAM and foundry/logic.
- Analysts see upside from rising deposition/etch intensity and vertical chip architectures, plus higher-margin services growth.
- AMAT trades near its 52-week high with elevated P/E multiples, increasing sensitivity to any demand slowdown.
- New U.S. export curbs on China are a key risk, with AMAT estimating about a $600 million revenue headwind in fiscal 2026.
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The move by KeyBanc to raise AMAT’s target to $380 reflects increased confidence in demand tailwinds from AI in both memory and logic/foundry markets. In particular, artificiaI-intelligence workloads are reviving interest in conventional DRAM, which KeyBanc describes as “arguably the AI-related device facing the most scarcity,” driving capacity expansion opportunities for companies like AMAT. The firm also points to increasing deposition and etch intensity as chip designs transition toward vertical architectures, boosting demand for AMAT’s tools and enabling DRAM scaling.
From a valuation standpoint, AMAT is trading at a trailing P/E near 36 and forward P/E near 32, with enterprise value and price-to-sales ratios significantly above many sector averages[additional search]. While this signals optimism baked into current pricing, it also exposes the stock to potential downside if growth slows or headswinds—such as China restrictions—intensify.
Indeed, AMAT forecasts a revenue hit of ~$600 million in fiscal 2026 due to tightened export controls, and prior guidance misses have raised questions over the certainty of near-term demand [additional sources]. At the same time, analysts like UBS argue that AMAT is well positioned to benefit: they project wafer fab equipment (WFE) spending to rise >20 % YoY in 2026 to ~$136.5 billion, driven by memory, which supports price target raises and upgrades across the board [additional sources].
Comparatively, peers KLA and Lam Research have seen stronger valuation multiple expansion, likely due to greater exposure to leading edge logic, metrology, and inspection tools. KeyBanc notes that AMAT’s comparatively high exposure to trailing edge nodes and China customers has constrained its multiple expansion, though those same exposures could generate revenue upside as AI demand permeates broader node tiers and geographic regions.
Strategic implications include: AMAT must manage policy risk (export controls), product mix shift toward high-intensity deposition/etch and vertical DRAM, leverage service/installed base growth, and gain market share in high margin segments. Key open questions include: sustainability of AI-driven WFE spend beyond memory and logic nodes, the impact of China restrictions beyond 2026, competitive tech shifts (e.g. alternative memory or packaging technologies), and whether AMAT can materially elevate margins / cash flows to justify the current elevated valuation multiples.
Supporting Notes
- KeyBanc raised AMAT’s price target to $380 from $285, maintaining Overweight rating, citing AI demand and benefits from increasing deposition and etch intensity and vertical chip architectures.
- AMAT’s current stock price (~$319.08) is near 52-week high (~$331); trailing P/E is ~37.29 per KeyBanc’s assessment; independent data shows trailing P/E ~34.9 and forward P/E ~31.5.
- UBS upgraded AMAT from Neutral to Buy and raised its target to $285, projecting WFE market growth >20% YoY in 2026 driven by memory markets; AMAT’s exposure to DRAM is highlighted as a strength [sources beyond primary].
- Due to new U.S. export restrictions, AMAT expects approximately a $600 million hit to revenue in fiscal 2026 [additional sources].
- AMAT’s revenue growth in recent year ~4-5% YoY, with company generating revenue ~US$28.4 billion in fiscal year ended October 26, 2025; operations margins and services segment showing growth[sources].
- Peers such as KLA and Lam Research have experienced greater valuation multiple expansion; AMAT’s relative under‐performance in valuation (versus peers) is attributed by KeyBanc to its higher exposure to trailing edge nodes and China markets.