Applied Materials (AMAT) Stock Forecast & Price Target

Applied Materials is poised for continued growth, bolstered by a broad customer base that includes major chipmakers and expectations of rising visibility into the market for 2026. The company expects its operating expenses to increase only modestly, supported by workforce reductions, while reporting robust system sales and margins, indicating overall financial health. Moreover, the potential for increased chip orders related to OpenAI is anticipated to significantly contribute to industry-wide gains, enhancing Applied's revenue prospects in the wafer fabrication equipment segment.

Applied Materials is currently facing multiple headwinds that contribute to a negative outlook on its stock. Key concerns include a 7% quarter-over-quarter revenue decline driven by weakened demand from foundry/logic and NAND segments, ongoing supply chain challenges, and potential difficulties in meeting critical product component needs. Furthermore, the company's restructuring efforts, along with risks associated with its China business and the integration of acquisitions, pose additional threats to margins and cash flow, leading to a potential downward revision of future earnings estimates.