Applied Materials' DRAM Revenues May Hit Record High: Analysts' Takeaways On FQ3 Print, Outlook

Shares of Applied Materials, Inc. AMAT were rising in early trading on Friday, after the company reported its fiscal third-quarter results.

The results came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

Mizuho Securities On Applied Materials

Analyst Vijay Rakesh maintained a Buy rating while raising the price target from $152 to $158.

Applied Materials reported “good” results for the July quarter and announced better-than-expected guidance for the October quarter, Rakesh said.

He added that the guidance is likely driven by stronger DRAM demand from domestic China customers, although “we could see some investor concerns over order pull-in.”

Morgan Stanley On Applied Materials

Analyst Joseph Moore reiterated an Equal-Weight rating, while raising the price target from $125 to $139.

“Strength in trailing edge logic (ICAPS) has been the story for AMAT this year, but a surprising surge in DRAM spending leaves revenues in the ballpark of peak level,” Moore wrote in a note.

The company’s DRAM revenues grew by 45% sequentially and 12% year-over-year in the fiscal third quarter, despite “relatively minimal contribution” from China, the analyst stated. He added that a surge in China revenue in October could “bring DRAM revenue to record levels up 61% y/y.”

Check out other analyst stock ratings.

Needham On Applied Materials

Analyst Charles Shi reaffirmed a Hold rating on the stock.
“Applied Materials reported strong F3Q23 (Jul) results that beat estimates on both the top and bottom line, and guided F4Q23 (Oct) well above the sell-side consensus,” Shi wrote.

“Informed by the call, we expect AMAT's CY23 foundry/logic revenue to be up by 5%, DRAM to be up by 20% (largely supported by CXMT shipments in F3Q23-F1Q24), and NAND to go down by 70%,” he added.

KeyBanc Capital Markets On Applied Materials

Analyst Steve Barger reaffirmed a Sector Weight rating on the stock.

“We think AMAT’s strong guidance is a function of its exposure to the more resilient sectors of the semi cycle including ICAPS and China, and expected gross margin tailwinds from the latter,” Barger said.

“On the call, AMAT focused on growth opportunities coming from the IoT and AI era and stressed that its leadership position in leading-and-trailing edge F/L, DRAM, and advanced packaging should allow for share gains and outgrowth relative to peers,” he added.

AMAT Price Action: Shares of Applied Materials had risen by 2.15% to $140.51 at the time of publication Friday.

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