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Investing.com - UBS upgraded Applied Materials (NASDAQ:AMAT) from Neutral to Buy and raised its price target to $285 from $250, citing expectations for significant growth in wafer fab equipment (WFE) demand. The stock currently trades at $230.91, within 5% of its 52-week high of $242.50, according to InvestingPro data.
The upgrade reflects UBS’s bullish outlook for the WFE market in 2026 and 2027, with forecasts calling for 2026 WFE to increase more than 20% year-over-year to $136.5 billion, driven primarily by memory chip production. This aligns with broader analyst sentiment, as InvestingPro shows 15 analysts have revised their earnings upwards for the upcoming period.
UBS expects DRAM WFE to rise by approximately $13 billion year-over-year, accounting for more than half of the anticipated $25 billion increase in total WFE, with Applied Materials positioned as the largest beneficiary of this DRAM spending surge among companies in UBS’s coverage universe.
Looking ahead to 2027, UBS believes WFE will approach $145 billion, a level the firm says is well above current market expectations.
UBS also noted that both Applied Materials and the broader industry may be underestimating the strength of China’s WFE demand in 2026, which it views as another source of potential upside and a meaningful tailwind for the company.
In other recent news, Applied Materials reported impressive financial results for the October quarter, with revenue hitting $6.80 billion and earnings per share reaching $2.17, both surpassing consensus estimates. The company also provided guidance for the January quarter, forecasting $6.85 billion in revenue and $2.18 earnings per share, again exceeding analyst expectations. Despite these strong results, Applied Materials faced some challenges, losing more than 200 basis points of wafer fab equipment market share, particularly in China, as noted by UBS, which maintained a Neutral rating and a $250 price target.
Craig-Hallum downgraded Applied Materials from Buy to Hold, citing growth delays and maintaining a $190 price target, as the company anticipates a business environment similar to last year. Meanwhile, Stifel reiterated a Buy rating with a $250 price target, highlighting the positive outlook due to strong performance in the DRAM segment. Cantor Fitzgerald also reiterated an Overweight rating with a $300 price target, reflecting confidence in the company’s future prospects. Additionally, Bernstein raised its price target to $250 from $195, maintaining an Outperform rating, following the company’s robust fourth-quarter results.
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