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Applied Materials, Inc. (NASDAQ: AMAT) is poised to benefit from unprecedented strength in the semiconductor capital equipment industry, according to D.A. Davidson.
The Applied Materials Analyst: Thomas Diffely upgraded Applied Materials from Neutral to Buy and raised the price target from $90 to $130.
The Applied Materials Thesis: Given the recent increase in capital spending by Taiwan Semiconductor Mfg. Co. Ltd. (NYSE: TSM) and the dynamic random access memory (DRAM) recovery at Samsung, the spending growth of wafer fab equipment in 2021 is projected at 10% to 15%, Diffely said in the upgrade note.
“This equates to a new record level between $65B to $70B,” the analyst said.
“Furthermore, we are introducing our 2022 view calling for continued expansion (up another 5% to 10%) based on ongoing strong spending for leading edge Foundry and DRAM, and a ramping recovery in the NAND market,” he added.
Applied Materials has maximum exposure to Taiwan Semiconductor Manufacturing Company and is “poised to outperform its peers this year,” according to D.A. Davidson.
AMAT Price Action: Shares of Applied Materials were down 2.4% at $105.53 at the close Tuesday.
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