Applied Materials (AMAT) in Focus: Morgan Stanley Hikes Price Target to $209

Core Viewpoint - Applied Materials, Inc. (NASDAQ:AMAT) is gaining attention on Wall Street, with Morgan Stanley upgrading the stock from Equal Weight to Overweight and raising the price target to $209 from $172, indicating a compelling investment opportunity [1][2]. Group 1: Stock Upgrade and Valuation - Morgan Stanley analyst Shane Brett upgraded AMAT's stock rating, citing a current trading discount of 25% compared to Lam Research, which is higher than the 10% average since 2023 [1]. - The new price target of $209 implies a 15% discount, suggesting potential upside for investors [1]. Group 2: Earnings Estimates and Market Position - The firm raised its 2026 EPS estimate for AMAT to $10.45 from $9.58, reflecting confidence in the company's growth prospects [2]. - AMAT is noted for its high exposure to DRAM spending and potential benefits from new wafer additions, positioning it favorably in the semiconductor industry [2]. Group 3: Market Sentiment and Risk Assessment - The analysis indicates a favorable risk-reward scenario for AMAT, with a 3:1 bull to bear skew and significant leverage to greenfield DRAM [2]. - The firm believes that risks associated with China, ICAPS, and leading-edge logic have been mitigated, further supporting a positive outlook for AMAT [2].