Applied Materials' (AMAT) solid fiscal Q3 results and better-than-expected Q4 revenue outlook are pointing to stronger demand and supporting the company's growth heading into 2027, RBC Capital Markets said in a Thursday note.

The company reported fiscal Q3 revenue of $9.1 billion and adjusted EPS of $3.50, above RBC's estimates of $8.9 billion and $3.36, respectively.

DRAM revenue increased 52% year over year in fiscal Q3, and management expects a significant uptick in H2 as customers expand clean room capacity, RBC analysts said.

Foundry revenue rose 22% year over year on advanced-node demand, while mature-node ICAPS demand is beginning to recover, RBC said.

Advanced Packaging is now tracking to more than 70% growth in 2026, compared with previous expectation of more than 50%, RBC said.

RBC maintained its outperform rating on Applied Materials and raised its price target to $600 from $520.

Shares of the company were more than 5% lower in Friday trading.

Price: 504.58, Change: -29.96, Percent Change: -5.60