UBS Lowers Applied Materials Price Target to $640

UBS analyst Timothy Arcuri lowered the price target on Applied Materials (NASDAQ: AMAT) to $640 (from $695) while maintaining a Buy rating.

“AMAT put up strong results, guided above, and is on track to gain close to ~100bps of WFE share this year – mostly we think in leading-edge foundry/logic and advanced packaging. While we have highlighted downstream risks like the mismatch between semis builds and data center powered shell capacity, we are seeing zero signs of any changes at the chip level (nor do we expect any), with AMAT mgmt indicating every customer is pushing across the board as hard as they can to get tools as fast as possible.

To this end, the commentary on its expansion in tool production suggests our numbers need to move a little higher and puts WFE close to $300B very much on the table for C2028 (Figure 8 WFERun-ate dAMT’sWFE Share). Net, we still like this one as the near-term customer mix will remain skewed to DRAM (where AMAT has very high share), though this may start to shift as we get into C2028/2029.

On slightly higher estimates but a lower target multiple, to reflect the sharp multiple compression across the broader semis supply chain, our PT goes to $640 (from $695).”

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