Applied Materials (AMAT) appears well-positioned given its leading position in DRAM and advanced logic, as well as exposure to new technologies such as gate-all-around, backside power delivery and 4F2, RBC Capital Markets said.
Fiscal Q3 guidance for revenue and earnings per share of $8.95 billion and $3.36 at the midpoint was well ahead of consensus and RBC estimates, with visibility extending to eight quarters and commentary pointing to 2027 being another strong growth year, according to the note Thursday.
RBC lifted its fiscal 2026 EPS estimate to $12.15 from $10.99 and its fiscal 2027 estimate to $15.77 from $13.58.
Applied Materials has a strong position in advanced logic and advanced packaging and also benefits from generative AI demand. The transition to GAA has been a core driver, and RBC expects Taiwan Semiconductor's (TSM) adoption of backside power to be a tailwind in the second half of 2026.
Management also lifted its longer-term Services growth forecast to mid-teens from low-teens due to the growing installed base and customer adoption of AI-enabled optimization solutions, the brokerage said.
RBC maintained an outperform rating on Applied Materials and raised the price target to $520 from $500.
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