BofA Securities Raises Applied Materials Price Target to $540

BofA Securities analyst Vivek Arya raised the price target on Applied Materials (NASDAQ: AMAT) to $540.00 (from $465.00) while maintaining a Buy rating.

“AMAT delivered record AprQ revenue/EPS 3%/8% above consensus and guided JulQ a solid 10%/17% ahead.

CY26 Systems sales are now expected to grow +30% YoY, upgraded from +20% YoY prior and directionally similar to semicap peers.

We highlight: (1) mgmt. has unprecedented visibility into CY27/28, with customers providing rolling eight-quarter forecasts; (2) demand is broadening across the company’s most strategic markets — leading-edge F/L, DRAM and advanced packaging — which mgmt. expects to account for >80% of YoY WFE growth in 2026 and a similar profile in 2027; and (3) the margin/FCF profile is improving, with Semi Systems GM already approaching 55% (+100bps YoY), overall GMs crossing 50%, richer mix/value pricing and slower opex growth supporting a potential path toward mid/high-30% operating margins over time, closer to peers LRCX/KLAC.

We see a path for FCF margins to expand healthily towards >30% LT funding continued capital returns where buybacks have reduced shares outstanding by ~13% since CY20.

Net-net, we are taking CY26/27E EPS up by 14%/18% to $13.48/$17.13 and raising our PO to $540 (from $465) on the same 32x CY27E PE on higher confidence in multi-year growth, margin expansion and sustained FCF returns.”

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