Investing.com -- UBS upgraded Applied Materials to Buy, citing what it calls a “significantly more bullish outlook” for the wafer fab equipment market over the next two years.
In a note led by analyst Timothy Arcuri, UBS raised its 12-month price target to $285 from $250, saying the company is positioned to benefit most from a surge in memory spending.
UBS’s revised forecast now calls for 2026 wafer fab equipment, or WFE, to rise more than 20% year over year to $136.5 billion, “driven primarily by memory.”
The note said UBS now expects DRAM-related WFE to increase by about $13 billion year over year, compared with its previous estimate of $9 billion, accounting for “more than half of the anticipated ~$25B increase in total WFE.”
According to UBS, Applied Materials “stands out as the largest beneficiary of this DRAM spending surge,” given its leading share of DRAM-related equipment spending.
The firm also highlighted what it sees as underappreciated upside from China, saying “the company – and the broader industry – is underestimating the strength of China’s WFE demand in 2026,” which UBS views as “another source of upside and a meaningful tailwind.”
Arcuri acknowledged that Applied Materials lost more than 200 basis points of WFE share this year, including about 340 basis points in China, but called those concerns “noise in such a strong upcycle.”
UBS added that it now forecasts 2027 earnings per share of about $13, versus the Street at $11.56, which it believes “supports a substantially higher share price.”
UBS expects Applied Materials to regain share in 2026 and 2027, calling both “very strong years for WFE.”