Applied Materials Inc. (NASDAQ:AMAT) could see semiconductor systems revenue grow about 40% this year as AI-driven chip investment continues to strengthen, according to JPMorgan.
Analyst Harlan Sur maintained an Overweight rating on Applied Materials with a $660 price forecast. The comments followed a Thursday meeting with Mike Sullivan, the company’s corporate vice president and head of investor relations.
Applied Materials Sees Stronger Chip Equipment Demand
Sullivan said roughly 40% year-over-year growth in Applied Materials’ Semiconductor Systems business appears achievable this year. Demand has strengthened over the past 13 weeks, although limited cleanroom space at customers could constrain further upside.
The company also plans to expand manufacturing capacity to support as much as twice its recent systems output by 2028. However, Sullivan stressed that the plan should not be viewed as a forecast for semiconductor equipment spending.
Instead, the company wants enough capacity to meet demand if the industry expands faster than expected. The company has more than eight quarters of visibility through its backlog and customer forecasts.
AI Drives Most Of Industry Growth
Applied Materials has become more confident about the 2027 wafer fabrication equipment outlook. Customer forecasts now extend into the first half of 2028, while some customers are discussing plans through 2030.
AI-related markets, including leading-edge logic, DRAM and advanced packaging, are driving about 80% of wafer fabrication equipment growth this year. Applied Materials expects a similar mix in 2027.
DRAM also represents a growing opportunity. The company estimates its revenue opportunity for every 100,000 greenfield wafer starts per month could rise from about $6 billion at 6F² technology to $6.5 billion at 4F² and $7.5 billion with 3D DRAM.
Meanwhile, Sullivan said value-based pricing is becoming increasingly important as the company seeks to capture more of the economic benefits its equipment delivers through better chip performance, yields and throughput.
AMAT Price Action: Applied Materials shares were down 0.67% at $492.85 at the time of publication on Thursday, according to Benzinga Pro data.
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