Summit Insights on Friday raised its rating for Applied Materials (NASDAQ:AMAT) to Buy from Hold, according to the research note made public the same day. The upgrade accompanied a bullish view that technology shifts across artificial intelligence, smartphones, personal computers and the Internet of Things will support outsized spending on logic/foundry and DRAM equipment in 2026.
At the time of the note, Applied Materials was trading at $328.39, a level that reflects roughly an 80% gain over the prior 12 months and places the stock near its 52-week high of $344.60. Summit Insights framed the upgrade around the company eing well positioned within wafer fabrication equipment - WFE - capital expenditure, particularly in the fastest-growing segments of that market.
While the analyst, Kinngai Chan, acknowledged that downside risk remains in mainstream node spending, Summit Insights assessed that Applied Materialsxposure to higher-growth WFE categories should mitigate that risk. The research firm said its industry checks point to AI-related strength in WFE spending continuing through the first half of 2027, which it views as a multi-quarter tailwind for the company.
Based on that outlook, the firm concluded Applied Materials and the broader semiconductor capital equipment group are positioned to outperform the broader semiconductor peer group in 2026. Summit Insights cited the concentration of growth in logic/foundry and DRAM spending as a key driver behind its sector-level view.
In separate corporate news, Applied Materials reported fiscal first-quarter 2026 results that topped expectations. The company posted earnings per share of $2.38, above the consensus forecast of $2.21. Despite the stronger-than-expected EPS, the stock declined in after-hours trading as investors reacted to the quarter and the companyuture outlook.
The earnings release underscores a solid quarter for Applied Materials, even as the market response varied. The publicly available commentary on the results did not include additional analyst projections or details on strategic moves such as mergers. The recent communications did not report further analyst upgrades or downgrades beyond the Summit Insights action. These items represent the set of recent developments disclosed about Applied Materials.
Key points
- Summit Insights upgraded Applied Materials to Buy from Hold, citing expected increases in logic/foundry and DRAM spending in 2026 driven by AI and other technology transitions.
- Applied Materials was trading at $328.39, up about 80% over the past year and close to its 52-week high of $344.60.
- The company reported fiscal Q1 2026 EPS of $2.38 versus a forecast of $2.21, though the stock fell in after-hours trading following the announcement.
Risks and uncertainties
- Downside risk in mainstream node spending remains a potential headwind, which could affect demand in parts of the wafer fabrication equipment market.
- Market reaction to earnings and outlook can be mixed, as evidenced by the after-hours decline despite an EPS beat; investor sentiment may influence near-term share performance.
- Broader semiconductor spending patterns and timing of capital expenditure cycles will determine whether the projected outperformance materializes for Applied Materials and the capital equipment sector.