2 Applied Materials Analysts See 'No Big Surprises' And Strong Demand, But Are There Clouds On The Horizon?

Applied Materials, Inc. AMAT reported adjusted earnings of $1.94 a share on sales of $6.52 billion for the second quarter, surpassing Street expectations of $1.78 a share in earnings on sales of $6.27 billion. The company also raised its guidance for fiscal 2023.

Morgan Stanley On Applied Materials

Analyst Joseph Moore maintained an Equal-Weight rating and price target of $115.

“It's a good result, all things considered,” Moore said in a note. He added that there were “no big surprises” in the figures reported by Applied Materials.

“We still see material downside to wafer fab equipment next year to the low $80 bn range, but the backdrop of recent supply constraints sets the equipment industry up for numbers to remain better for longer even with that backdrop,” the analyst further wrote.

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BofA Securities On Applied Materials

Analyst Vivek Arya reiterated a Buy rating, while raising the price target from $118 to $125.

“Demand still outpaces supply by ~$300mn, as foundry/logic strength more than offset memory weakness,” Arya said in a note.

Although management indicated that incremental capacity should help sequential growth for the next few quarters, “concerns of customer (both memory and logic/foundry) capex pushouts/reductions remain, prompting us to be somewhat conservative in AprQ and beyond (vs. mgmt),” Arya added.

AMAT Price Action: Shares of Applied Materials had declined by 3.89% to $104.06 at the time of publication Friday.