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Investing.com - Goldman Sachs initiated coverage on Applied Materials (NASDAQ:AMAT), a $156.8 billion semiconductor equipment maker with a solid 48% gross margin, with a Buy rating and a price target of $225.00 on Thursday.
The investment bank believes Applied Materials is positioned to benefit from the semiconductor industry’s ongoing shift toward 3D architectures, which requires more intensive etching and deposition processes.
Goldman Sachs noted that Applied Materials has established a portfolio of critical equipment tools, with approximately 30% of the company’s systems revenue generated from integrated solutions.
While the firm acknowledges that competition from Chinese manufacturers remains intense in the semiconductor equipment space, it expects these competitors’ market share gains will primarily be limited to serving local Chinese demand.
The $225 price target represents potential upside from Applied Materials’ current trading level, reflecting Goldman Sachs’ positive outlook on the company’s position in the semiconductor equipment market.
In other recent news, Applied Materials reported a quarterly dividend increase to $0.46 per share, marking a 15% rise from the previous dividend and continuing an eight-year trend of dividend growth. The company returned nearly $2 billion to shareholders through dividends and share repurchases in the second quarter of fiscal 2025, with $15.9 billion remaining in its share repurchase authorization. Meanwhile, Morgan Stanley (NYSE:MS) upgraded Applied Materials’ stock to equalweight, citing revised revenue and EPS estimates of $28.6 billion and $9.36 for fiscal year 2025, respectively. However, Redburn-Atlantic downgraded the stock to neutral, expressing concerns over market share losses in its Physical Vapor Deposition segment and vulnerability to localization efforts in China. TD Cowen maintained a Buy rating but reduced the price target to $220, pointing to strong product momentum and pricing power as positive factors. Cantor Fitzgerald also upheld an Overweight rating with a $200 price target, noting that Applied Materials’ EPS exceeded expectations despite slight revenue misses. The firm’s analyst highlighted the company’s solid gross margins and aggressive share buybacks as indicators of its robust financial health.
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