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Applied Materials' analyst price target has increased by approximately $4 to $199, as analysts cite stabilizing risk and reward dynamics and expectations for improving revenue growth, despite ongoing concerns about demand headwinds and China exposure.

Analyst Commentary

Recent research reflects a divided outlook on Applied Materials, with both supportive and cautious perspectives emerging from the Street. The following summarizes the main points from recent analyst notes:

• Bullish analysts are increasing price targets, some to as high as $220, citing favorable risk and reward conditions and improving expectations for revenue growth in upcoming quarters.
• Despite short-term headwinds, the company is viewed as well positioned to benefit from secular trends such as increased wafer fab equipment spending and high bandwidth memory demand. These factors are projected to drive growth through 2025 and beyond.
• The current underperformance relative to peers is seen as potentially setting up an attractive entry point. Sentiment is described as muted but poised for improvement on catalysts tied to leading-edge technologies.
• There is expectation that U.S. policy shifts and a renewed push for domestic chip production could ultimately favor U.S.-concentrated semiconductor equipment makers like Applied Materials over time.

• Bearish analysts express concern over ongoing demand headwinds and weaker-than-expected guidance, particularly connected to China, where digesting pulled-in demand and increased domestic competition could pressure near-term results.
• Lowered price targets and neutral or hold ratings have been assigned due to share losses in specific product lines, especially physical vapor deposition, and uncertainty regarding customer activity in China.
• Potential volatility associated with the macro environment, continued U.S. export restrictions, and muted demand across consumer and industrial segments are cited as risks that could limit upside in the near term.
• Visibility into core earnings potential remains clouded, leading to a cautious stance on valuation and the outlook for Applied Materials' execution in the face of global competition.

What's in the News

• Applied Materials was sued by Chinese chip equipment supplier E-Town in Beijing, accused of trade secret theft related to plasma technologies, with E-Town seeking about 100 million yuan in damages (Bloomberg).
• Applied Materials announced a strategic collaboration with GlobalFoundries to establish a waveguide fabrication facility in Singapore. The initiative aims to accelerate photonics development for next-generation AI and AR applications.
• JBD, RayNeo, and Applied Materials achieved a breakthrough in full-color waveguide AR glasses technology. This led to improved display quality and a commercial launch in the RayNeo X3 Pro.
• Applied Materials joined the global semiconductor consortium ‘JOINT3’ along with 26 major firms to advance organic interposer technology for next-generation semiconductor packaging.
• Applied Materials provided fiscal year 2025 earnings guidance, expecting total revenue of $6.7 billion, plus or minus $500 million.

Valuation Changes

• Fair Value has risen slightly from $194.90 to $198.97, reflecting analyst optimism about Applied Materials' prospects.
• Discount Rate increased marginally, moving from 10.18% to 10.25%. This indicates a minor adjustment to perceived risk factors.
• Revenue Growth expectations improved, up from 4.31% to 4.90%. This points to slightly stronger anticipated top-line expansion.
• Net Profit Margin has edged down, decreasing from 28.32% to 28.03%. This suggests a more cautious outlook on near-term profitability.
• Future P/E ratio has increased from 20.36x to 21.52x, signaling a higher valuation multiple being applied to projected earnings.