Mizuho upgraded Applied Materials (NASDAQ:AMAT) on Tuesday, moving its rating from Neutral to Outperform and lifting the firms price target to $370 from $275. The stock was trading at $332.85 at the time of the report, roughly 1% below its 52-week high of $336.47, and the company carries a market capitalization of $263.57 billion.
In its rationale, Mizuho pointed to accelerating capital expenditure across the United States, Taiwan and Japan as the primary driver of the more optimistic view. The firm now projects wafer fabrication equipment (WFE) spending to expand by 13% year-over-year in 2026 and by 12% year-over-year in 2027, a step-up from prior expectations that implies potential upside for Applied Materials as the world's second-largest supplier in the WFE market.
Applied Materials has shown solid recent financial metrics. Reported revenue for the last twelve months stood at $28.37 billion, with a trailing revenue growth rate of 4.39%. Data from InvestingPro cited in the note assigns the company an overall financial health score of 2.92, categorized as "GOOD," and highlighted stronger marks in profitability (4.0) and price momentum (4.31). Analyst consensus remains favorable, with a 1.74 recommendation score on the InvestingPro scale where 1 equates to Strong Buy and 5 to Strong Sell.
Mizuho highlighted that foundry and logic customers - which together account for roughly 65% of Applied Materials' revenue - should be meaningful beneficiaries of elevated capital expenditure. The research note references guidance from a major foundry indicating that its spending for 2026-2028 will be "significantly higher" than in the 2023-2025 period, and it also flags expectations for improved tool capital spending from Intel in 2026.
Geographic exposure appears to be a factor in the upgraded view. Mizuho noted that China is becoming less of a headwind for Applied Materials because revenue originating outside of China, which represents about 70% of the firms total revenue, is accelerating at a faster pace than revenue within China.
Investor returns have been strong: Applied Materials posted a 92.5% price total return over the past year and an 80.04% return over the past six months, underscoring a sharp re-rating in the stock as market expectations for WFE demand have shifted upward.
Other broker actions cited alongside the Mizuho upgrade point to broader optimism across the WFE supplier group. Deutsche Bank upgraded Applied Materials to a Buy and set a $390 price target, reflecting a more positive view of the WFE environment through 2026 and 2027. KeyBanc Capital Markets raised its price target for Applied Materials to $380 while maintaining an Overweight rating, attributing upside to the company's diversified supplier position and potential gains from increasing deposition and etch intensity as chip architectures move toward vertical designs. RBC Capital initiated coverage with an Outperform rating and a $385 price target, citing the company's performance relative to the SOX index. Stifel increased its price target to $340, pointing to Applied Materials' high-quality portfolio and broad product set.
The note also referenced activity at peer companies. Lynx Equity raised its price target for Lam Research to $280, arguing that the company's earnings potential into 2027 may remain under-appreciated by the Street, even after Lam's stock surged about 125% over the past six months.
Taken together, the analyst revisions reflect a common thread: expectations for a stronger WFE spending cycle driven by major foundry and logic customers, supportive geographic demand dynamics, and supplier-specific advantages that could lift revenue and margins across the equipment makers. For Applied Materials, Mizuhos upgrade centers on the prospect that accelerating capex in the U.S., Taiwan and Japan will translate into deeper tool orders and a more favorable demand cadence in 2026 and 2027.
While the market has already re-rated Applied Materials substantially over recent periods, the constellation of analyst upgrades and higher price targets indicates continued conviction that the company stands to capture a meaningful share of any WFE growth, particularly in segments tied to foundry and logic spending.