Applied Materials (AMAT.US) became a market standout on Friday after Wall Street praised its financial guidance. At the time of writing, the company's stock surged nearly 11% in pre-market trading, while other chip equipment stocks like Lam Research (LRCX.US), ASML (ASML.US), and KLA (KLAC.US) showed mixed performance.

Wells Fargo analyst Joe Quatrochi assigned Applied Materials an "Overweight" rating with a $435 price target. The analyst was impressed by the company's guidance, particularly against a backdrop of rising industry expectations. He noted in a client report, "While the company did not provide a specific forecast for calendar 2026 Wafer Fab Equipment (WFE), it expects Semiconductor Systems revenue to grow over 20% year-over-year, significantly exceeding Wall Street's prior consensus of 11%." Quatrochi added, "Similar to peers, Applied Materials anticipates a stronger second-half weighted revenue performance. Based on current fab readiness, this pattern could set the stage for robust performance in 2027. AI remains the core driver of demand growth, propelling WFE growth primarily in leading-edge logic/foundry (F/L), DRAM/HBM, and advanced packaging. We are also positive on the stability of the ICAPS business and the latest outlook for China—this should help Applied Materials outperform in the 2026 WFE market."

Evercore ISI analyst Mark Lipacis was also impressed, stating that following the report he expects the valuation gap between Applied Materials and peers ASML, Lam Research, and KLA to narrow. The analyst rated Applied Materials "Outperform" with a $400 price target. Lipacis wrote in a client note, "We expect this valuation gap to close as WFE growth accelerates in 2027 and Applied Materials benefits from an acceleration in DRAM+HBM and leading-edge F&L spending."

Bank of America analyst Vivek Arya was even more optimistic, suggesting it was time for Applied Materials to "shine." Arya raised his price target for Applied Materials from $350 to $420 and reaffirmed his "Buy" rating. Arya stated that as the world's largest and most diversified semiconductor equipment giant, Applied Materials is effectively meeting substantial AI demand due to its strong positioning in the current multi-year WFE cycle focused on leading-edge logic/foundry (F/L) and DRAM. Arya further noted in his client report, "Beyond cyclical growth, Applied Materials' leadership in DRAM (global number one supplier), advanced packaging, and deposition and conductor etch processes forms the core engine for its cross-cycle market share gains—we forecast its market share will increase by approximately 100 basis points in calendar 2026. Notably, nearly all revenue growth this year came from non-China regions, as ICAPS/China sales were roughly flat year-over-year."

Applied Materials reported its fiscal first-quarter 2026 earnings after the U.S. market close on Thursday. The results not only surpassed market expectations but also provided a strong boost of confidence for a broad semiconductor industry recovery with its highly expansionary guidance. For the first fiscal quarter ended January 25, 2026, the company reported revenue of $7.01 billion. Although this represented a slight decrease year-over-year, it was significantly higher than the analyst consensus estimate of $6.87 billion. In terms of profitability, non-GAAP earnings per share reached $2.38, well exceeding the market expectation of $2.21.

Beyond the solid quarterly results, Wall Street analysts were particularly encouraged by Applied Materials' optimistic growth outlook. The company projected that fiscal second-quarter 2026 revenue would climb to approximately $7.65 billion, with an EPS forecast range of $2.44 to $2.84 (excluding certain items). This outlook substantially surpassed the Wall Street consensus estimate of $2.29.

Applied Materials CEO Gary Dickerson expressed ambitious views on the industry's prospects during the earnings call. He stated that as investment in AI computing accelerates, the company's full-year semiconductor equipment business growth rate is expected to exceed 20%. Dickerson further predicted that 2026 would be a historic inflection point for the global semiconductor industry, with total industry output potentially reaching the $1 trillion milestone.