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Applied Materials, Lam Research stocks rise after Goldman turns bullish

Emily Bary

Goldman Sachs analyst Toshiya Hari upgraded Applied Materials Inc. and Lam Research Corp. shares to buy from neutral on Monday, while also upgrading KLA Corp. shares to neutral from sell. His increasing conviction on the sector reflects his view that the memory market is showing early signs of stabilization. "Predicated on our improved outlook in memory as well as our view that competitive dynamics will keep logic/foundry spending elevated, we now forecast the [wafer fab equipment] market to grow 7% year over year in 2020, up from our prior assumption of flat year over year," Hari wrote. He expects that more "disciplined" actions from memory manufacturers, including capital-expenditure cuts, will improve the memory supply/demand balance sooner than he previously expected and driver higher levels of wafer-fab equipment spending. Hari elevated Applied Materials shares to Goldman's conviction list in conjunction with the upgrade. Applied's shares have risen 46% so far this year, as the S&P 500 has gained 19%.