Bank of America has raised its price target on Applied Materials to $720, up from $540, while maintaining a Buy rating. The semiconductor equipment maker closed at $585.88, suggesting a potential 23% upside.
The stock dropped approximately 8% on the day of the upgrade.
BofA now projects the total addressable market for semiconductors will reach $2.7 trillion by 2030, a $400 billion increase from its prior estimate. The bank cites demand for memory chips and data center buildouts, both critical for AI infrastructure.
Applied Materials produces equipment for chip manufacturers. The company recently launched new systems for deposition, etching, and bonding, targeting DRAM production and advanced packaging for AI chips.
The stock's decline highlights investor debate over whether the semiconductor bull case is fully priced in. Applied Materials competes with ASML, Lam Research, and KLA for chipmaker spending. The industry remains cyclical, but BofA bets AI demand represents a structural shift.