Semiconductor equipment makers have spent most of this decade at the mercy of a single question. How long will chipmakers keep spending?
For years, nobody knew the answer. Fabrication plants planned in short cycles, and equipment suppliers assumed the boom would eventually slow down.
That assumption is being tested in 2026, and Applied Materials (AMAT) has become the clearest test case.
AMAT stock has climbed sharply. Wall Street keeps raising targets, and Goldman Sachs just told clients the stock can still climb higher.
Why Goldman Sachs raised its Applied Materials price target to $645
Goldman Sachs kept its buy rating on Applied Materials and lifted its 12-month price target to $645from $520, MarketScreener reports.
Goldman applies about 32 times a normalized earnings figure of roughly $20 per share, Odaily noted. That means the bank is paying up for durability rather than for one strong quarter.
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The reason is DRAM. DRAM sits inside servers, and in its high-bandwidth form, it sits next to every serious AI accelerator. Applied Materials sells the tools that build it.
Goldman expects the company to grow faster than its peers in 2026. Order visibility now stretches into 2028, and pricing gains could add to that.
What Applied Materials does, and why DRAM demand changes its earnings
Applied Materials is not a chip designer. It makes the machines that deposit, etch, and package the layers inside a chip.
That means AMAT earns money when fabrication plants expand, rather than when a specific chip sells well.
That distinction matters for investors, because it turns AMAT into a bet on capital spending across the whole industry, instead of a bet on one customer.
Related: Goldman Sachs sees AMD entering earnings with 1 powerful advantage
Applied Materials posted record fiscal second-quarter revenue of $7.91 billion, up about 20% from a year earlier, with earnings of $2.86 a share against a $2.68 estimate.
Goldman now predicts non-GAAP earnings of $14.15 a share for 2026, about 6% above the consensus figure tracked by StockAnalysis.
Where the growth is coming from
- DRAM and high-bandwidth memory buildouts, including new greenfield fabs
- Leading-edge logic at the 2nm generation and below
- Advanced packaging, where management guides for more than 50% revenue growth in calendar 2026
How Applied Materials stock has traded against the market this year
Numbers only matter here because they explain why Goldman had to move at all.
According to Yahoo Finance, Applied Materials opened near $627 on Thursday, July 9, up about 6.8% on the session.
The stock is also up roughly 22% over the past month, with a market value near $470 billion.
So far in 2026, the shares are up about 127%. The S&P 500 has gained roughly 10% over the same stretch.
Applied has already delivered the kind of return that usually arrives only after a target hike, and the run has drawn a steady stream of target increases.
Applied Materials versus the broader market in 2026
- AMAT, year to date: Up about 127%
- S&P 500, year to date: Up about 10%
- AMAT, past month: Up about 22%
- AMAT, from its 52-week high of $739.67: Still down about 18%
What the Applied Materials CEO said about chip demand through 2030
The stock jumped on July 9 after CEO Gary Dickerson told Nikkei Asia that chipmakers are now handing over equipment demand forecasts covering two years or more.
He also noted some plans reaching as far as 2030.
Long-range forecasts from customers give a supplier confidence to add capacity before the orders formally arrive.
Wall Street heard the same thing Goldman did. TD Cowen lifted its target to $700 from $525 on the same day, and Mizuho moved to $650, Nikkei Asia reported.
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The semiconductor setup that makes this call harder than it looks
Goldman is confident about the fundamentals and cautious on the entry point, and the bank says so plainly in its second-quarter semiconductor preview, Odaily reported.
Analysts expect most chip sub-sectors to beat estimates this quarter, but the Philadelphia Semiconductor Index has already gained about 88% against roughly 14% for the S&P 500.
When a sector runs that far ahead of the index, good results stop being enough. The bar moves with the price.
Applied Materials reports its fiscal third-quarter results on Aug. 13, with consensus at $3.39 a share on revenue of $8.94 billion, Blockonomi reported.
Risks Applied Materials investors should weigh before buying the rally
Goldman names two specific dangers, and neither is priced into a 127% gain this year.
The first is regulatory. New export restrictions on advanced tools would hurt a company that sells most of its equipment to China, Taiwan, and Korea.
The second is competitive. Domestic Chinese equipment suppliers keep taking a share, and every point they win comes out of Applied’s addressable market.
The company flags both risks in its SEC filings.
What would have to go right for the $645 target to hold
- DRAM and HBM capacity plans stay on schedule rather than slipping a quarter.
- Advanced packaging clears the 50% growth bar management set for calendar 2026.
- Export rules stay roughly where they are.
- Hyperscaler capital spending holds through the second half of the year.
What this means for Applied Materials investors deciding what to do next
Goldman’s $645 target sits below where several rivals now stand, and it sits close to today’s price. That says something useful.
The average target across 29 analysts is about $617.21, which means the stock has already outrun the consensus view of fair value.
For long-term holders, the DRAM and packaging story looks structural rather than cyclical, and it echoes the memory demand shift.
For new investors, the August 13 earnings report is what to watch, since it will show whether the multi-year forecasts Dickerson described are turning into booked orders.
Buying a stock after it has doubled is not automatically a mistake. However, it removes the margin for error that made the trade attractive in the first place.
Related: Top analysts set jaw-dropping Micron stock target after surge