On May 23, analyst Joseph Quatrochi from Wells Fargo maintained a Buy rating on Applied Materials, Inc. (NASDAQ:AMAT) while keeping the price target of $200. The reiteration comes after the company released fiscal second quarter results for 2025 on May 15.

A technician in a clean room assembling a semiconductor chip using a microscope.

Applied Materials, Inc. (NASDAQ:AMAT) delivered $7.10 billion in revenue reflecting 7% year-over-year growth. Notably, the EPS grew 14% during the same time to $2.39 surpassing analyst expectations by $0.08. Management reported the quarter to be driven by increased demand for AI-enabling semiconductors.

Analyst Joseph Quatrochi highlighted the growth was driven by increased revenue contributions from major clients including Samsung and TSMC. Samsung’s quarterly revenue contribution increased 65% year-over-year, whereas TSMC contributed 21% to the company's total revenue, reflecting a 150% increase during the same time.

In addition, Quatrochi noted that despite revenue declining in some areas, excluding contributions from major clients, the overall financial health of Applied Materials Inc. (NASDAQ:AMAT) remains strong. The company anticipates third-quarter revenue to be around $7.2 billion with an EPS between $2.15 to $2.55.

While we acknowledge the potential of AMAT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than AMAT and that has 100x upside potential, check out our report about the cheapest AI stock.

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