20% growth guidance crushes expectations, Applied Materials (AMAT.US) surges in pre-market trading! Wall Street is bullish on the upward cycle for 2027.

On Friday, Applied Materials, Inc. (AMAT.US) became the market focus, with Wall Street expressing appreciation for its performance guidance. As of the time of publication, the company's stock price had risen nearly 11% in pre-market trading, while the performance of other chip equipment stocks such as Lam Research (LRCX.US), ASML Holding NV ADR (ASML.US), and KLA Corp (KLAC.US) was a mixed bag. Wells Fargo & Company analyst Joe Quattrucci gave Applied Materials, Inc. a "buy" rating with a target price of $435. The analyst was impressed with Applied Materials, Inc.'s performance guidance, especially in the context of ongoing industry expectations. He emphasized in a client report, "Although the company has not disclosed specific estimates for wafer fab equipment (WFE) for the 2026 calendar year, it expects semiconductor systems revenue to achieve a year-on-year growth of over 20%, far exceeding the previous 11% consensus expectations on Wall Street." Quattrucci pointed out, "Like its peers, Applied Materials, Inc. expects revenue to be more heavily weighted in the second half of the year, based on the current state of wafer fabs, and this trend may lay the foundation for strong performance in 2027. Artificial intelligence remains the core driver of demand growth, and WFE growth is mainly led by advanced logic/wafer foundry (F/L), DRAM/HBM, and advanced packaging areas. At the same time, we maintain a positive outlook on ICAPS business and the latest expectations for the Chinese market - this is expected to help Applied Materials, Inc. outperform the market in the 2026 WFE market." Evercore ISI analyst Mark Lipacis was also impressed and stated that after the report's release, he expected the valuation gap between Applied Materials, Inc. and its peers ASML Holding NV ADR, Lam Research, and KLA Corp to narrow. The analyst gave Applied Materials, Inc. an "outperform" rating and set a target stock price of $400. Lipacis wrote in a client report, "We anticipate that as WFE accelerates in 2027, and Applied Materials, Inc. benefits from accelerated spending on DRAM+HBM and advanced F&L, this valuation gap will narrow." Bank of America Corp analyst Vivek Arya was even more optimistic, calling it a shining moment for Applied Materials, Inc. Arya raised the target stock price for Applied Materials, Inc. from $350 to $420 and reiterated a "buy" rating. Arya stated that as the world's largest semiconductor equipment giant with the widest product portfolio, Applied Materials, Inc. has effectively met the huge demand for artificial intelligence (AI) in this wafer fab equipment (WFE) cycle focused on advanced logic/wafer foundry (F/L) and DRAM areas. Arya further pointed out in the client report: "In addition to cyclical growth, Applied Materials, Inc.'s leadership position in DRAM (the world's largest supplier), advanced packaging, and deposition and conductor etching processes constitutes the core engine driving its market share across cycles - we predict its market share in calendar year 2026 will increase by about 100 basis points. It is worth noting that almost all the revenue growth this year comes from non-China regions, as ICAPS/China region sales are basically flat year-on-year." It is understood that Applied Materials, Inc. reported its financial results for the first quarter of fiscal year 2026 after the US market closed on Thursday, which not only exceeded market expectations but also injected a strong dose of optimism into the semiconductor industry with its highly expansive performance guidance. In the first quarter ended January 25, 2026, the company achieved revenue of $7.01 billion, slightly down year-on-year but significantly higher than analysts' previous forecast of $6.87 billion. In terms of profitability, non-GAAP earnings per share reached $2.38, well above the market's expected $2.21. Compared to the already secured quarterly performance, Wall Street analysts were more encouraged by Applied Materials' optimistic outline for future growth. The company expects revenue for the second quarter of fiscal year 2026 to rise to approximately $7.65 billion, with earnings per share in the range of $2.44 to $2.84 (excluding certain items). This forecast significantly surpassed the Wall Street average expectation threshold of $2.29. Applied Materials, Inc. CEO Gary Dickerson made a bold assessment of the industry's prospects during the earnings conference call. He pointed out that as AI computing investments enter an accelerated phase, the company's full-year semiconductor equipment business growth rate is expected to exceed 20%. Dickerson further predicted that 2026 will be a historical turning point for the global semiconductor industry, with the industry's total output value expected to reach the milestone of $1 trillion.