Applied Materials (AMAT) Stock Forecast & Price Target

Applied Materials is anticipated to benefit from a moderate increase in operating expenses, expected to rise by approximately 3% year-over-year, following a period of workforce reduction that has enhanced operational efficiency. The company reported a sequential decline in systems revenue of 5% to $4.770 billion; however, this figure exceeded expectations due to strong demand in the DRAM, NAND, and foundry segments, coupled with improved customer visibility for 2026. Additionally, Applied Materials is forecasted to experience continued growth, particularly in the latter half of 2026, driven by promising orders linked to advancements in AI, which could significantly contribute to the overall semiconductor wafer fabrication equipment market.

Applied Materials faces significant challenges that contribute to a negative outlook for its stock, particularly related to declining revenue and earnings amid weakening global semiconductor demand, particularly for foundry/logic and NAND sectors. The company's reliance on mature node technologies and exposure to potential trade restrictions in China further complicate its financial trajectory, as does the risk associated with the integration of acquisitions, which may result in lower margins and cash flow. Additionally, ongoing supply chain issues and a possible cyclical downturn in GDP could further impair the company's performance, leading to downward revisions in future earnings estimates.