BofA Securities Lowers Applied Materials Price Target to $650

BofA Securities analyst Vivek Arya lowered the price target on Applied Materials (NASDAQ: AMAT) to $650 (from $720) while maintaining a Buy rating on August 14, 2026.

“Despite a solid beat/raise, shares are weaker after market as investors may have been looking for QoQ guidance growth closer to LRCX (+13% QoQ vs.

LRCX’s +20%) along with more leverage in gross margins (guided flat QoQ).

However, we find a number of reasons to be positive on this report: (1) mgmt. signaled confidence in outgrowing WFE in CY26 which some peers like LRCX have sized as growing high-30% YoY.

DRAM grew ~50% YoY in JulQ and likely accelerates in 2H along with F/L which in our view should help push Systems growth to >40% YoY; (2) over 80% of WFE growth this year is coming from F/L, DRAM, and advanced packaging.

We think this mix of drivers looks similar in CY27 and suspect AMAT could outgrow again; (3) GMs hovering around ~50% trail LRCX in the mid-50%, but are up +300bps since CY23, with Systems GMs of 55% alone up +200bps YoY while pricing benefits lay ahead; (4) advanced packaging is now growing >70% YoY as AMAT takes share; (5) along with a detailed next eight quarter customer forecast, AMAT also has visibility on inflections out to CY30.

We raise our CY26/27/28E EPS by 8%/15%/22% but lower our PO to $650 (from $720) based on 27x CY28E P/E (vs. 36x CY28E prior), at a standard 2x discount to our LRCX valuation.

Reiterate Buy as AMAT is capturing value this upcycle, but note our top semicap pick is LRCX given better GMs and FCF despite similar growth (both have CY26-28 EPS CAGR of 29%).”

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