KeyBanc Raises Price Target on Applied Materials to $750 and MKS Instruments to $475
Claire Weston
KeyBanc lifted its price target on Applied Materials from $550 to $750 (+36%) and MKS Instruments from $360 to $475 (+32%), as a global memory-expansion wave pushes semiconductor equipment into a new demand peak.
Why such large target hikes in a single move?
KeyBanc reiterated Overweight on both Applied Materials (AMAT) and MKS Instruments (MKSI), raising targets by 36% and 32% respectively — unusually large for a single revision.
The new AMAT target of $750 implies roughly 31× P/E on updated 2028 EPS; the MKSI target of $475 implies roughly 29× P/E.
This means → KeyBanc is not betting on a short-term bounce. It has anchored its earnings model to 2028, signaling it sees this equipment upcycle lasting at least three more years.
What makes Applied Materials stand out?
KeyBanc cites two reasons: more attractive relative valuation and overall leadership across semiconductor equipment.
In plain terms = Applied Materials is the "all-rounder" of the equipment industry, covering nearly every critical process step — when fabs expand, customers cannot avoid it.
The implied 31× multiple is not aggressive — provided 2028 earnings forecasts actually materialize.
Why is MKS Instruments called a "top pick"?
KeyBanc names MKSI as one of its top picks for semiconductor-equipment exposure, citing three factors: a valuation discount, exposure spanning advanced-node semis, NAND upgrades — the generational expansion of memory chips — and advanced packaging, plus ongoing deleveraging that should accelerate EPS growth.
This means → MKS is a "multi-lane beneficiary" — memory expansion, advanced packaging, and leading-edge nodes each independently drive its order book.
How big is the memory-expansion spending wave?
South Korea announced four new chip fabs in its southwest, with at least KRW 30 trillion earmarked over 15 years for next-gen memory, edge AI, and defense chips; Samsung and SK Hynix are expected to invest over KRW 1,000 trillion in the next decade.
Micron guided Q4 FY2026 capex at roughly $10 billion, full-year at about $27 billion, and expects quarterly spending to rise further in FY2027.
In plain terms = memory giants in Korea and the U.S. are pouring money into new fabs simultaneously — most of that spending ultimately converts into equipment purchase orders, and AMAT and MKSI sit squarely on the receiving end.
Is it just KeyBanc — or is the whole Street moving?
Wells Fargo raised its 2027 global wafer-fab equipment spending estimate from roughly $180 billion to $190 billion, driven by 3nm/2nm ramps, CoWoS/3D advanced packaging, and accelerating memory capacity.
Citi's bull case projects global WFE rising from about $145 billion in 2026 to $250 billion in 2028, while lifting targets on AMAT to $710, Lam Research to $450, and KLA to $290.
This reflects a rapid convergence of Street consensus on the equipment upcycle — the next verification points will be whether quarterly capex at each chipmaker actually delivers on these projections.
Content is for reference only, not financial advice.