Cantor Fitzgerald lowers Applied Materials price target to $200 from $220

Investing.com - Cantor Fitzgerald has reduced its price target on Applied Materials (NASDAQ:AMAT) stock to $200 from $220 while maintaining an Overweight rating. The semiconductor equipment giant, with a market capitalization of $134 billion and robust gross margins of 48%, currently trades below InvestingPro’s Fair Value estimate.

The firm cited disappointing October quarter guidance that fell significantly below consensus estimates, with the company projecting $6.70 billion in revenue and $2.11 in earnings per share versus consensus expectations of $7.32 billion and $2.38. Despite the guidance shortfall, InvestingPro data shows the company maintains strong financial health with an overall score of "GOOD" and impressive return on equity of 36%.

Cantor Fitzgerald identified two main factors behind the guidance shortfall: a $500 million headwind from capacity digestion in China and another $500 million headwind from lower-than-expected leading edge demand, partially offset by approximately $200 million in upside from multinational ICAPS.

Despite the disappointing report relative to peers and investor expectations, Cantor Fitzgerald maintains that Applied Materials’ 2026 growth story remains intact, projecting the company can still deliver mid-teens EPS growth, though it reduced its stretch goal EPS estimate from $12.00 to $11.00.

Applied Materials stock fell to $162 in after-hours trading following the announcement, with Cantor Fitzgerald noting it still sees over 20% upside potential while acknowledging "it might take some time for the market to agree" with their assumptions.

In other recent news, Applied Materials reported July quarter earnings per share that exceeded consensus estimates by 5%. However, the company’s guidance for the October quarter was weaker than expected, with projected revenue of $6.7 billion, falling short of the $7.32 billion consensus estimate. This shortfall was attributed to approximately $500 million in slower China revenues and $500 million in slower Gate-All-Around technology ramp, partially offset by $300 million better performance in other regions.

Analysts have responded to these developments with varied adjustments to their price targets for Applied Materials. Mizuho and Wolfe Research both lowered their price targets to $200, maintaining an Outperform rating, while UBS reduced its price target to $180, citing company-specific challenges. Needham, on the other hand, maintained a Buy rating with a $240 price target, despite the earnings miss attributed to increased weakness in China and softness in leading-edge logic demand. Evercore ISI reiterated an Outperform rating with a price target of $209, noting the company’s earnings exceeded expectations but faced challenges in its October quarter outlook.

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