Lynx Equity has issued a cautious note on Applied Materials (NASDAQ:AMAT) ahead of the company’s first-quarter earnings report, citing elevated market expectations following a recent sharp rally in the stock.
At the time of Lynx’s commentary, Applied Materials shares were changing hands at $339.88, after gaining 11.81% over the prior week and trading near a 52-week peak of $344.60. That recent surge is part of a much larger move: the stock has returned 81.23% over the last six months.
Valuation context
Despite the price appreciation, InvestingPro data cited by Lynx indicates the shares are trading above Fair Value and carry a price-to-earnings ratio of 39.53. Consensus estimates referenced in Lynx’s note show fiscal 2026 EPS of $9.60, and a consensus recommendation score of 1.74 on the typical buy/hold/sell scale.
Guidance expectations and comparables
Lynx outlined its view that Applied Materials is likely to guide second-quarter sequential growth in the "low-single digit range." The firm positions that outlook closer to KLA Corporation’s 1.5% quarter-over-quarter guidance than to Lam Research’s 6.6% quarter-over-quarter outlook. Lynx warns that if Applied Materials’ guidance aligns more with the lower growth scenario, the stock may give back some of its recent gains.
For investors, the comparison to peers underscores how near-term guidance from equipment suppliers can set expectations across the wafer fabrication equipment (WFE) sector. Lynx said it currently favors Lam Research over Applied Materials and reiterated a $280 price target for Lam Research while holding off on an updated price target for Applied Materials until management completes the upcoming earnings call.
Second-half outlook and potential upside
Lynx also suggested Applied Materials’ management could supply a semi-quantitative outlook for the back half of fiscal 2026 during the earnings discussion. If management signals second-half growth materially stronger than the 15% consensus estimate cited in Lynx’s note, that commentary could support the stock despite cautious near-term guidance.
Strategic moves and product announcements
Applied Materials has been active on several strategic fronts ahead of the report. The company announced a collaboration with Samsung Electronics, which will participate in the new $5 billion EPIC Center in Silicon Valley focused on advanced semiconductor equipment research and development. The EPIC Center represents a notable U.S. investment in semiconductor R&D capacity.
Alongside the partnership news, Applied Materials introduced new systems targeting 2nm transistor technology. These include the Viva pure radical treatment system, the Sym3 Z Magnum conductor etch system, and the Spectral atomic layer deposition system, all designed to improve chip performance for next-generation nodes.
Other analyst activity
Lynx’s cautious stance sits alongside several bullish analyst views. RBC Capital reiterated an Outperform rating on Applied Materials, pointing to the company’s strong positioning and growth prospects in areas such as DRAM/HBM memory and advanced logic. RBC expects results to come in modestly above expectations.
Mizuho moved its rating on Applied Materials from Neutral to Outperform, citing growth in wafer fabrication equipment demand and higher capital expenditures across the United States, Taiwan, and Japan. These analyst actions reflect continued investor interest in Applied Materials’ addressable markets even as individual firms caution on near-term guidance.
What to watch on the earnings call
Investors listening to Applied Materials’ earnings event should focus on the management tone and any semi-quantitative details about second-half fiscal 2026. With Lynx signaling likely low-single-digit sequential growth for the coming quarter, clarity on the company’s expected revenue cadence and capital intensity across customer markets will be key to assessing whether recent share gains are sustainable.
Until the call provides updated guidance and additional color, Lynx’s note suggests caution as market expectations may be modestly high given the recent run-up in the stock price.