Goldman Sachs Raises Applied Materials Price Target to $645, Bullish on DRAM and HBM Growth
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Goldman Sachs raised its price target on Applied Materials from $520 to $645 while keeping a Buy rating, arguing that DRAM and HBM capacity buildouts will drive equipment demand for years — a bet not on one quarter's earnings, but on the industry's entire capital-spending cycle.
Why is Goldman raising the target now?
The new $645 target sits about 7% above the latest close, implying roughly 32× normalized EPS of about $20 per share.
This means → Goldman is valuing Applied Materials on long-run steady-state earnings, not near-term upside — 32× prices in what the company can earn in a "normal" year.
Goldman forecasts 2026 non-GAAP EPS of $14.15, roughly 6% above the Street consensus, and expects the company to outgrow peers.
Why does the thesis center on DRAM and HBM?
DRAM — dynamic random-access memory, the most common memory chip in servers — is Applied Materials' core revenue driver. HBM — high-bandwidth memory, a premium DRAM variant — is the must-have companion to AI accelerator chips.
In plain terms = Applied Materials sells the machines that *make* memory chips, not the chips themselves. Its earnings track how fast fabs expand, not how many individual chips ship.
This reflects a broader point: owning Applied Materials is essentially a bet on the industry-wide capex cycle — as long as fabs keep building and buying equipment, the company keeps benefiting.
What other growth drivers exist beyond memory?
Three parallel tracks: ① DRAM and HBM capacity buildouts, including new fabs; ② demand from sub-2 nm advanced logic nodes; ③ advanced packaging — bundling multiple chips into a single package.
Management expects the advanced-packaging segment to grow revenue by more than 50% in 2026, making it the fastest-growing business line.
Order visibility already extends to 2028. CEO Gary Dickerson said some customers have shared equipment-demand plans stretching to 2030.
How did the latest earnings look?
Fiscal Q2 revenue hit $7.91 billion, up 11% year-over-year — a record. EPS came in at $2.86, beating the Street estimate of $2.68.
The next report drops August 13; consensus expects EPS of $3.39 on revenue of $8.94 billion.
This means → August 13 is the key proof point — whether management's multi-year growth narrative is converting into actual orders will start showing up in this print.
The stock is up 135% this year — is there room left?
Year-to-date, the stock has surged 135%, versus roughly 11% for the S&P 500 — far outpacing the broader market.
Goldman is confident on fundamentals but cautious on timing, flagging two risks it considers not fully priced in.
The 29 covering analysts have a consensus target of $617.21, just above the latest close of roughly $602.50 — most see limited near-term upside.
What are those two risks?
Export-control risk: Applied Materials ships most of its equipment to mainland China, Taiwan, and South Korea. New restrictions on advanced-process equipment would hit revenue directly.
Competitive risk: Chinese semiconductor-equipment makers are steadily gaining market share, squeezing Applied Materials' addressable market.
In plain terms = the fundamental story is strong, but "who you're allowed to sell to" and "how fast rivals are catching up" remain open questions with no clear resolution yet.
市场有风险，内容仅供研究参考，不构成投资建议。