S&P 500 may face selling pressure as systematic funds reach full exposure
Investing.com - Goldman Sachs has reiterated its Buy rating for Applied Materials (NASDAQ:AMAT) with a price target of $225.00, according to a recent research note. The semiconductor equipment maker, currently trading at $182.82 with a market capitalization of $146.7 billion, shows a P/E ratio of 22x. InvestingPro analysis suggests the stock is slightly overvalued at current levels.
The investment bank expects Applied Materials to outperform industry peers despite projecting modest wafer fabrication equipment (WFE) industry growth of only 2% in 2026. This outperformance is attributed to the company’s significant exposure to deposition and etch technologies, which should see stronger demand relative to other segments. The company’s strong financial position is evident in its healthy 48.1% gross profit margin and robust return on equity of 36%.
Goldman Sachs anticipates these technologies will benefit from increased spending on gate-all-around (GAA) logic and stacked memory structures. The firm also expects upside to Applied Materials’ quarterly results and guidance, citing positive reports from industry peers.
Investor focus is likely to center on Applied Materials’ growth potential for 2026, its exposure to the Chinese market, and competitive trends within China, according to the research note. The durability of memory spending represents another key area of investor interest.
Goldman Sachs analyst James Schneider noted that investor positioning appears balanced following mixed commentary on 2026 industry trends, with semiconductor equipment manufacturer KLA taking "a more constructive tone" regarding the outlook.
In other recent news, Applied Materials has been at the center of several significant developments. Goldman Sachs initiated coverage of the company with a Buy rating and set a price target of $225, citing potential benefits from the semiconductor industry’s shift toward more intensive processes. In contrast, Redburn-Atlantic downgraded Applied Materials from Buy to Neutral, lowering the price target to $200 due to concerns about market share loss in its Physical Vapor Deposition segment. Meanwhile, Morgan Stanley maintained its Equalweight rating with a price target of $169, projecting the company’s October quarter revenue to rise slightly above previous estimates, between $7.4 and $7.5 billion. This projection surpasses both Morgan Stanley’s flat growth estimate and the Street consensus of 1.5% growth. Additionally, the semiconductor equipment sector, including Applied Materials, faced pressure after ASML warned of potential growth uncertainties in 2026 related to U.S. tariffs. These recent developments highlight the mixed analyst perspectives and external challenges facing Applied Materials.
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