Applied Materials' (AMAT) fiscal Q4 results were "uninspiring" and offered little that could reshape the investor sentiment, Morgan Stanley said in a note Friday.
Analysts said investors have three main concerns about the company. First, Applied Materials is not gaining ground in China's ICAPS market, and export restrictions aren't expected to loosen. Second, although the company talks up 2026 growth in leading-edge logic and dynamic random-access memory, or DRAM, its 2025 foundry logic growth is only 2.5%, far behind Lam Research's (LRCX) much stronger outlook. Third, the company is promoting a 2026 rebound, but also saying chip-equipment growth likely won't improve until late fiscal 2026.
"We had thought this was the quarter where the narrative could change for AMAT but we were wrong and we don't think the stock will outperform equipment in the near-term absent material changes in the operating environment," the analysts said.
They added that they remain confident in the DRAM business but were too optimistic about China and ICAPS risks. They now expect Applied Materials to grow in line with the WFE market in 2026.
For calendar year 2026, the analysts now forecast revenue of $30.4 billion and earnings per share of $10.10. For calendar year 2027, they now expect $33.2 billion in revenue and earnings per share of $11.24.
Morgan Stanley adjusted its price target on Applied Materials to $252 from $256 and maintained its overweight rating.
Price: 222.74, Change: -0.49, Percent Change: -0.22
Comments