By Nate Wolf

Applied Materials is at risk of losing share in the semiconductor-equipment industry amid growing competition from China, according to Mizuho Securities.

Analysts led by Vijay Rakesh downgraded Applied Materials to Neutral from Outperform and lowered their price target to $175 from $200 in a research note. The company likely will lag behind the overall wafer fab equipment, or WFE, market in 2026, the firm said.

Applied Materials stock was falling 1.1% to $168.31 in premarket trading Friday. The chipmaking equipment company was up 4.6% this year as of Thursday's close, while the Nasdaq Composite has gained 14%.

Chinese competitors Advanced Micro-Fabrication Equipment and Naura Technology are gaining share in core parts of their domestic semiconductor manufacturing business, such as etching, Mizuho said. That dynamic is a particular risk for Applied Materials, which the firm estimated has around $8 billion to $9 billion in China revenue exposed to these rivals.

"We believe AMAT could see downside with continued China share loss," Rakesh wrote, forecasting the company's China revenue could decline 15% to 20% year over year.

One key player in the WFE industry isn't so vulnerable to growing competition. Lam Research is better positioned to weather the disruptions from China given its product mix, Mizuho argued. If anything, the company is gaining share in equipping critical steps of the chip manufacturing process.

Mizuho reiterated an Outperform rating for Lam stock and lifted its price target to $130 from $120. Shares ticked up 0.2% to $115.84 Friday.

Applied Materials had warned in its quarterly earnings report last month that it faced sales challenges in China, due in part to tariff risks.

"We are currently operating in a dynamic macroeconomic and policy environment, which is creating increased uncertainty and lower visibility in the near term, including for our China business," Applied Materials CEO Gary Dickerson said in a statement at the time.

In an interview with Barron's after the earnings were released, Dickerson said near-term challenges in the company's sales pipeline hadn't dented his confidence in its longer-term growth outlook, including around robotics and artificial intelligence.

A growing number of voices on Wall Street have become more skeptical over the last few months, however. Of the 36 analysts polled by FactSet, 22 have Buy or equivalent ratings on the stock and 14 rate it a Hold, down from a 26-to-10 split in June.

Write to Nate Wolf at nate.wolf@barrons.com

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September 12, 2025 08:29 ET (12:29 GMT)

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