Utilized Supplies (AMAT) reported its Q1 earnings on February 12. The earnings beat consensus estimates for adjusted EPS and income, and the inventory is buying and selling 10% increased on the time of writing, Friday morning, Feb. 13, in keeping with Yahoo Finance.
The provider of semiconductor and semiconductor-related fabrication gear reported income of $7 billion, a 2% year-over-year decline, but the earnings report bought traders excited and prompted Financial institution of America analyst Vivek Arya to boost his worth goal for Utilized Supplies.
The reason for pleasure was CEO Gary Dickerson’s ready remarks in the course of the earnings name: “For Applied, we expect to grow our semiconductor equipment business more than 20% this calendar year. We see the demand profile weighted towards the second half of the calendar year, with availability of customer cleanroom space being a key factor pacing the rate of investment.”
Dickerson continued by making this nice outlook sound even higher. “Our largest customers are giving us increased longer-term visibility to ensure we have operational capacity and service support in place for their ramps,” he added.
“Based on this visibility, we expect strong growth momentum to be carried into 2027.”
To place all of it in perspective, we will take a look at the whole Q2 steering versus what analysts anticipated. The numbers come from the Financial institution of America analysis observe shared with TheStreet.
Utilized Supplies Q2 2026 outlook vs. estimates previous to earnings:
Metric
Administration Steerage (Q2 2026)
Wall Avenue Consensus
Financial institution of America
Complete Income
$7.65 Billion (±$500M)
$7.03 Billion
$6.85 billion
Non-GAAP Diluted EPS
$2.64 (±$0.20)
$2.29
$2.20
Non-GAAP Gross Margin
~49.3%
48.5%
48.4%
The nice outlook makes much more sense once we take into account what the Semiconductor Business Affiliation (SIA) estimates for 2026.
“The global semiconductor industry posted its highest-ever annual sales in 2025, nearly hitting $800 billion, and global sales in 2026 are projected to reach roughly $1 trillion,” said SIA CEO John Neuffer.
Utilized Supplies CEO expects robust progress momentum to be carried into 2027.
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Financial institution of America raises Utilized Supplies inventory worth goal
Following the report’s launch, Financial institution of America analyst Vivek Arya and his staff up to date their view on AMAT inventory.
New BofA Q2 estimates are:
- Income of $7.65 billion
- Non-GAAP diluted EPS of $2.64
- Non-GAAP gross margin of 49.3%
The staff estimates the corporate will achieve roughly 1% in 2026, due to cyclical progress, management in DRAM, superior packaging, and deposition and conductor etch techniques.
Analysts raised their non-GAAP EPS estimates for 2026 and 2027 by 18% and 24% to $11.86 and $14.57, respectively.
BofA’s famous key likes:
- Utilized International Providers might develop at a charge increased than the everyday low-double-digit tempo via regular set up base growth, with all recurring income serving to fund capital returns.
- Utilized Supplies captures greater than 50% of the serviceable addressable market share in inflection factors resembling Gate-All-Round (GAA) and bottom energy supply, the place income alternatives improve by 30% versus FinFET.
- Programs’ gross margins of 54% improved by 1% yr over yr and may increase additional as Utilized Supplies costs to worth.
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Arya reiterated his purchase ranking for AMAT inventory and raised the worth goal to $420 from $350, based mostly on his 29 a number of of his price-to-earnings ratio estimate for calendar yr 2027.
He mentioned the a number of is on the excessive finish of Utilized Supplies’ historic buying and selling vary of 10 to 30. The numbers are justified by the potential for wafer fab gear outgrowth in 2026 and 2027, Arya added, they usually stay at a reduction relative to different giant friends, given a extra balanced progress profile and decrease profitability.
In accordance with the staff, draw back dangers for AMAT are:
- Slower-than-expected capital spending cycle
- Delay in reminiscence capability provides
- Market share loss in deposition, implant, thermal, chemical mechanical planarization, etch, or course of management segments
- Demand destruction in PCs and cell as a headwind
- Merger and integration threat, together with macro headwinds
Current Utilized Supplies exercise
Utilized Supplies reached a settlement settlement with the U.S. Division of Commerce, Bureau of Business and Safety, concerning allegations that sure buyer shipments to China between November 2020 and July 2022 didn’t adjust to the U.S. Export Administration Rules, based mostly on the corporate’s misunderstanding of the applicability of these laws.
The corporate has agreed to pay $252.5 million to the Division of Commerce. The U.S. Division of Justice and the SEC have closed their associated investigations with out motion.
Extra AI Shares:
- Morgan Stanley units jaw-dropping Micron worth goal after occasion
- Financial institution of America updates Palantir inventory forecast after non-public assembly
- Morgan Stanley drops eye-popping Broadcom worth goal
Utilized Supplies introduced that Samsung Electronics will be part of the brand new, $5 billion Gear and Course of Innovation and Commercialization (EPIC) Middle in Silicon Valley. In accordance with Utilized Supplies, its EPIC Middle will open this yr because the world’s largest facility for collaborative analysis and improvement of semiconductor course of expertise and manufacturing gear.
The co-development packages on the EPIC Middle can be designed to hurry up the event and deployment of next-generation semiconductor applied sciences. The joint analysis and improvement packages will work on new supplies and course of applied sciences for chips, a number of manufacturing processes (nodes) forward of the present era.
Utilized Supplies launched new deposition, etch, and materials-modification techniques that enhance the efficiency of logic chips at 2nm and past. The transition to GAA transistors is a pivotal second for the business, as it would allow energy-efficient computing wanted to ship extra highly effective AI chips.
“The rapid progress of AI is pushing compute performance to the limit, and breakthroughs in computing begin with the transistor,” mentioned Dr. Prabu Raja, president of the Semiconductor Merchandise Group at Utilized Supplies.
“To keep pace in the angstrom era, Applied is delivering materials engineering breakthroughs that improve energy-efficient compute. Together, these new systems extend Applied’s longstanding leadership in driving major transistor and wiring inflections, while helping customers accelerate their chip roadmaps to keep up with the blistering pace of AI.”
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