The stockholders of Applied Materials (AMAT) are ecstatic, and for good cause. It’s worth mentioning that the stock price of this semiconductor equipment manufacturer has risen by around 52% in the past year.
The expansion of wafer fab equipment (WFE) leader AMAT is being fueled by strong demand momentum for a variety of applications across numerous sectors like Automotive, Power, 5G Rollout, IoT, Data Centers, Image Sensors, Computing, and so on.
Furthermore, a global shortage of semiconductor chips is forcing automobiles to compete for chips. As a result, Applied Materials is receiving more requests for chip manufacturing equipment.
Analysts Weigh In
Jefferies analyst Mark Lipacis initiated coverage on Applied Materials shares with a Buy rating and a $197 price target, implying 23.5% upside potential from the current levels.
Lipacis believes the firm will benefit from the strong demand for cutting-edge chips used in the Internet of Things, due to the continuous transition in the computer industry.
Focusing on the same, he writes, “We believe that the computer industry is transitioning from a cellphone / serial processing era, with billions of cellphones, to an IoT [Internet of Things] / parallel processing era, with tens of billions of IoT devices made with chips on trailing nodes.”
Another analyst, Mizuho Securities’ Vijay Rakesh, considers AMAT to be one of his top selections for 2022. He believes AMAT is well-positioned to benefit from WFE expenditure in 2022, which is expected to expand by around 10% year-over-year, driven by logic/foundry spending. He also expects that the company’s chip demand will be driven by its strengths in Data Centers, 5G, IoT, and Automotive.
As a consequence, Rakesh kept his Buy rating and raised the price target to $178 from $161 per share.
Wall Street’s Take
The rest of the analysts on TipRanks are also bullish about Applied Materials stock. AMAT stock has received a Strong Buy consensus, based on 13 Buy and 4 Hold ratings on the stock. As for price targets, the average AMAT stock price prediction of $175.19 implies almost 9.8% upside potential from the current levels.
In addition to analysts remaining bullish, the stock’s TipRanks SmartScore, which comprises 8 unique data sets, indicates that the stock has strong potential to outperform market expectations.
Meanwhile, hedge funds are also piling into AMAT stock. TipRanks’ Hedge Fund Trading Activity tool shows hedge funds have added 380.2K Applied Materials shares to their holdings over the past three months.
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