HSBC Initiates Applied Materials at Buy

HSBC analyst Adithya Metuku initiated coverage of Applied Materials (NASDAQ: AMAT) with a Buy rating and a price target of $517.00.

“AMAT has the most comprehensive portfolio of tools used in the manufacture of semiconductors, with leadership positions in equipment used for deposition, process control and etching.

Hence, it is well placed to benefit from structurally rising WFE demand. Near term, we see WFE growth of 29%/31% in 2026/27e and believe our 2027 WFE estimates may be ahead of street expectations.

We expect AMAT’s revenue growth to accelerate driven by the DRAM (HSBCe DRAM WFE up 50%/60% in 2026/27) and advanced foundry/logic markets. We model non GAAP dil.

EPS growth of 25%/51% YoY in FY26/27e, up from 8.9% in FY25.

While the shares have performed strongly YTD (+67% vs SOX index +62%), we see upside as our FY26/27 non GAAP op. profit estimates are 6%/25% ahead of consensus, driven by our WFE estimates.

There may be additional upside if WFE continues to surprise positively, potentially driven by Terafab and foundry initiatives at Samsung and Intel gaining momentum.”

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