Applied Materials, Inc. (NASDAQ: AMAT) is closing out 2025 trading near record highs after a 60%+ year‑to‑date rally, powered by the AI semiconductor boom, strong fiscal 2025 earnings and a wave of analyst upgrades. On December 4, TD Cowen raised its price target on AMAT to $315 and called the stock its “best idea for 2026,” underscoring growing conviction that the company sits at the heart of the next phase of chipmaking investment. [1]
At the same time, Applied Materials has just been awarded a role in a ₹4,500 crore (roughly $540–550 million) project to modernise India’s only government‑run chip fab in Mohali, while continuing to navigate U.S. export controls that are curbing future sales into China. [2]
Below is a detailed, news‑driven breakdown of what changed around December 4, 2025, how Wall Street now values AMAT, and what it could mean for investors watching Applied Materials stock.
AMAT stock: near record highs after a 60%+ 2025 surge
Recent trading data and analyst reports show AMAT:
- Trading around $268–269 per share, just below a new 12‑month high of $269.15. [3]
- Up roughly 62% year‑to‑date, with a 66%+ gain over the last six months, according to Investing.com and Finviz. [4]
- Valued at about $214 billion in market cap, with a P/E near 31, a PEG ratio around 2.7, and beta of about 1.7, reflecting both growth expectations and elevated volatility. [5]
Finviz notes that AMAT’s latest leg higher came on December 2, when the stock jumped about 4% after several firms raised targets and ratings, pushing shares to roughly $265–266 and marking a fresh 52‑week high. [6]
TD Cowen names AMAT a top 2026 idea with a $315 price target
The most important development on December 4, 2025 is TD Cowen’s new call:
- New price target: Raised from $260 to $315.
- Rating: Reiterated Buy.
- Implied upside: About 17% from a reference price of $268.63 at the time of the note. [7]
TD Cowen’s thesis focuses on AMAT’s position at the intersection of two powerful chip cycles:
- DRAM memory equipment
- Leading‑edge foundry and logic (advanced nodes)
According to the firm’s research, roughly 50% of Applied Materials’ semiconductor portfolio is exposed to these high‑growth segments. [8]
Key forecasts from TD Cowen’s note:
- Non‑China DRAM equipment spending: modeled to grow roughly 17% in 2026, with potential upside to 20%.
- Leading‑edge foundry equipment: forecast ~15% growth in 2026, weighted to the second half of the year, as new cleanroom projects ramp at major customers such as TSMC. [9]
TD Cowen also highlights AMAT’s role as a top beneficiary of the DRAM and high‑bandwidth memory (HBM) capacity build‑out tied to AI accelerators, as well as new DRAM projects at Samsung, Micron and SK Hynix through 2027. [10]
AI boom fuels a wave of upgrades from KeyBanc, UBS and Morgan Stanley
The TD Cowen call lands on top of a series of bullish analyst moves in recent days:
- KeyBanc Capital Markets raised its AMAT price target from $240 to $285, keeping an Overweight rating and citing “favorable relative positioning ahead of several tech transitions” including N2/GAA nodes, high‑bandwidth memory and advanced packaging. [11]
- UBS upgraded AMAT from Neutral to Buy and set a $285 target, pointing to strong demand for wafer fab equipment used in memory production as AI workloads drive more DRAM and HBM investment. [12]
- Morgan Stanley lifted its price target from $252 to $273, maintaining an Overweight rating and emphasizing AMAT’s leverage to AI‑related capital spending. [13]
Finviz reports that these combined calls triggered the December 2 spike, with shares closing at $265.33, up about 4.2% on the day and leaving AMAT roughly 62% higher for 2025. [14]
Another December 4 article on Finviz summarises Applied as “attractively valued” vs. peers despite the rally, given that competing chip‑equipment names already embed higher growth expectations in their multiples, and argues AMAT is positioned to ride multi‑year AI demand for power‑efficient chips and packaging technologies. [15]
India’s ₹4,500 crore SCL Mohali modernization: a new strategic growth lever
On December 4, India’s Mint reported that Tata Semiconductor Manufacturing, Cyient Semiconductors, and Applied Materials’ Singapore subsidiary have won a ₹4,500 crore mandate to modernise Semi‑Conductor Laboratory (SCL) in Mohali, currently India’s lone state‑run fabrication plant. [16]
Key details from the report:
- SCL today produces 180‑nanometre chips, mainly for space, defence and energy applications.
- The modernization project aims to upgrade the fab to produce 28–65 nm industrial chips, a big step closer to contemporary process nodes for industrial and power electronics. [17]
- The modernization of SCL’s fabrication equipment and software was awarded to Applied Materials, while Tata and Cyient won other bid packages focused on wafer fab upgrades and RF/power‑management technologies. [18]
- The project is funded via India’s Semiconductor Mission and awaits formal cabinet approval, with government officials indicating work could start “in a matter of weeks” and be operational within about two years. [19]
Strategically, this deal:
- Strengthens Applied’s presence in India’s nascent semiconductor manufacturing ecosystem.
- Aligns the company with India’s goal to reduce dependence on imported industrial chips in critical sectors like power and energy.
- Creates a potential long‑term services and upgrade revenue stream once the fab is modernised. [20]
FY 2025 earnings: record year, slower top‑line but strong margins
Applied Materials’ latest results (fiscal Q4 2025, reported in mid‑November) set the fundamental backdrop for today’s bullish calls.
According to Zacks and related coverage: [21]
- Q4 FY 2025 revenue: about $6.8 billion, down roughly 3% year‑over‑year, but ahead of consensus estimates by ~1.5%.
- Non‑GAAP EPS:$2.17, down about 6–7% from a year ago but beating estimates by ~3%. [22]
- Segment mix (Q4):
- Semiconductor Systems: $4.76 billion, ~70% of revenue, down ~8% YoY.
- Applied Global Services: $1.63 billion, ~24% of revenue, slightly down YoY but above expectations.
- Display & other (now grouped under “Corporate and Other”): about $415 million. [23]
- Margins & cash:
- Non‑GAAP gross margin around 48.1%, up ~60 bps YoY.
- Non‑GAAP operating margin around 28.6%.
- Free cash flow for the quarter: approx. $2.0 billion.
- Cash & short‑term investments: $8.6 billion; long‑term debt: $6.5 billion. [24]
- Shareholder returns: About $1.22 billion returned in Q4 alone via $851 million in buybacks and $365 million in dividends. [25]
Management and the company’s own release also highlighted record full‑year revenue of around $28.4 billion, up roughly 4% year‑over‑year, and another record year for EPS and free cash flow. [26]
Forward guidance: solid near term, stronger second half of 2026
For Q1 FY 2026, Applied Materials guided to: [27]
- Net sales: about $6.85 billion ± $500 million.
- Non‑GAAP EPS: roughly $2.18 ± $0.20, slightly above what consensus expected at the time.
On the earnings call and in subsequent Reuters coverage, executives flagged that: [28]
- Wafer fab equipment (WFE) spending is expected to accelerate from the second half of calendar 2026, driven by AI‑related demand and new memory/foundry projects.
- Near‑term revenue will be held back by tighter U.S. export controls affecting shipments into China (more on that below), but management still sees overall 2026 revenue skewed toward the back half of the year.
Wall Street forecasts: bullish on earnings, mixed on upside
Consensus ratings and price targets
MarketBeat’s December 4 update, which incorporates TD Cowen’s latest move, shows: [29]
- Rating: “Moderate Buy”
- Breakdown: roughly 20 Buy ratings vs. 14 Holds.
- Average 12‑month price target: about $230–235 per share, notably below the current market price in the high‑$260s.
StockAnalysis, which aggregates 20+ analysts, similarly shows: [30]
- A “Buy” consensus.
- An average target around $226–227, with a range from roughly $165 to $300 (not yet fully incorporating TD Cowen’s new $315 target).
In other words, the Street broadly likes AMAT, but many models still lag the stock’s latest move, implying limited upside or even mild downside unless forecasts are revised higher.
Revenue and EPS forecasts
Forecast data compiled by StockAnalysis/Finnhub suggests: [31]
- Revenue:
- 2026 average estimate: about $29.4 billion, implying low single‑digit growth from 2025.
- 2027 average estimate: around $33.1 billion, implying a low‑teens growth rate if realized.
- EPS:
- 2026 average EPS forecast: roughly $9.7.
- 2027 average EPS forecast: about $11.6, pointing to double‑digit annual EPS growth as AI‑driven capex ramps.
These numbers fit TD Cowen’s view that 2026–2027 could mark the next up‑cycle for high‑end DRAM and leading‑edge foundry tools, even as 2025 revenue and earnings growth have flattened.
Valuation concerns: has AMAT run too far?
Not all analysis is unreservedly bullish. A recent Simply Wall St piece questions whether AMAT has “run too far” after its 62% 2025 surge, estimating via a DCF model that the stock may be around 68% overvalued versus its calculated fair value. [32]
The ts2.tech outlook published just before the December 1 open reaches a similar conclusion:
- Bull case: world‑class profitability, record earnings, strong AI and DRAM tailwinds, and rising institutional ownership.
- Cautious case: most major price targets cluster below the current share price, China risk remains unresolved and WFE is inherently cyclical, making AMAT more of a “great company, fairly rich valuation” story than an obvious bargain. TechStock²+1
Institutional flows show deep‑pocketed confidence
Fresh 13F‑based updates on December 4 highlight that large asset managers are still adding to positions:
- CW Advisors LLC increased its AMAT stake by 32.8% in Q2, adding 22,481 shares to bring its holdings to 90,939 shares (worth about $16.6 million at quarter‑end). [33]
- First Trust Advisors LP lifted its holdings by 5.3%, and now owns about 0.37% of AMAT, valued at roughly $541 million in its latest filing. [34]
- MarketBeat’s compilation puts institutional ownership around 80.6% of the float, underlining how heavily owned AMAT already is by big funds and hedge funds. [35]
These flows support the bull case that “smart money” continues to view AMAT as a core AI‑infrastructure holding, even at elevated prices, though they also mean the shareholder base is crowded—something that can amplify volatility if sentiment turns.
China export controls: a structural headwind into 2026
A key risk thread running through the latest coverage is the impact of tightening U.S. export controls on China.
Reuters’ detailed report on November 13 notes that Applied: [36]
- Expects spending on chipmaking equipment in China to fall in 2026, as new U.S. restrictions limit what the company can ship.
- Previously estimated a $600 million hit to fiscal 2026 revenue from these rules.
- Could not ship about $110 million of products in Q4 due to an “affiliate rule”; those systems are now expected to ship in the quarter ending January after the rule was temporarily suspended.
- Can no longer supply China’s memory‑chip market and certain older‑node equipment without licenses, while non‑U.S. toolmakers are still able to sell to some of those customers, creating potential share‑loss risk.
Management also emphasized that:
- AMAT’s share of revenue from China has receded from nearly 40% in recent years to the mid‑20% range.
- WFE spending is nonetheless projected to accelerate from the second half of 2026, driven by non‑China investments in AI‑related capacity. [37]
This dual reality—regulatory drag in China, strong AI demand elsewhere—is core to the current investment debate.
Key drivers to watch in 2026
Putting the December 4 news in context, several themes emerge for AMAT’s 2026 trajectory:
- AI‑driven DRAM and HBM build‑out
- TD Cowen’s forecast of mid‑teens to high‑teens growth in DRAM and leading‑edge foundry equipment spending in 2026 hinges on sustained demand for AI accelerators, high‑bandwidth memory and advanced packaging. [38]
- Wafer fab equipment cycle
- Both Reuters and company guidance point to stronger WFE spending in the second half of 2026, as new fabs ramp and greenfield projects move from shell to tool installations. [39]
- India and other new markets
- The SCL Mohali modernization contract creates a foothold in India’s strategic chip ecosystem and could open doors to follow‑on service, upgrade and local‑ecosystem work. [40]
- Valuation reset vs. earnings growth
- With the stock already near or above many existing price targets, further upside may depend on Street estimates moving up—for example, if AI‑related capex proves stronger than currently modeled and export‑control headwinds are less severe than feared. TechStock²+1
Risks investors should keep on the radar
While the latest news flow is overwhelmingly positive, several risk factors stand out:
- Regulatory and geopolitical risk: Tighter U.S. export controls on China, with a quantified $600 million 2026 revenue headwind, plus the potential for further rule changes. [41]
- Cyclical industry dynamics: Even with AI, WFE remains cyclical; a slowdown in broader semiconductor capex, or an “AI digestion” phase, could compress both earnings and valuation multiples. TechStock²
- Valuation stretch: DCF‑based models (e.g., Simply Wall St) and several target‑price aggregates now place AMAT’s fair value meaningfully below the current share price, suggesting less margin for error. [42]
- Crowded ownership: With 80%+ institutional ownership, any shift in fund positioning—whether due to macro concerns, regulation or AI sentiment—could magnify volatility. [43]
What December 4’s news means for Applied Materials stock
Taken together, the December 4, 2025 developments and recent data points paint a clear picture:
- Bullish side:
- TD Cowen’s $315 target and “best idea for 2026” call strengthen the narrative that AMAT is one of the premier AI infrastructure plays in the market. [44]
- A major India fab‑modernization win adds a long‑dated growth and influence lever in a strategically important geography. [45]
- Record earnings, high margins and robust free cash flow support continued dividends and buybacks, while institutional investors continue to add exposure. [46]
- Cautious side:
- AMAT is trading near all‑time highs, already above many older price targets and at a valuation some models now label as “rich” or “overvalued.” [47]
- China export restrictions add a structural drag and open the door for non‑U.S. rivals to capture some share. [48]
- The WFE cycle and AI capex could still disappoint if the global economy slows or AI workloads normalize faster than expected. TechStock²+1
For readers tracking AMAT on Google News or Discover, the core takeaway from the December 4 news flow is this:
Applied Materials is being treated by Wall Street as a high‑quality, AI‑leveraged compounder with new strategic wins (like the India fab mandate) and strong financials—but priced in a way that assumes its AI and DRAM super‑cycle thesis will largely play out.
As always, this article is informational only and not investment advice. Anyone considering AMAT stock should weigh their own time horizon, risk tolerance and view on AI‑driven semiconductor capex and global trade policy, and, if needed, consult a qualified financial adviser.
References
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