Mizuho upgraded Applied Materials to Outperform from Neutral and increased its price target to $370, arguing that semiconductor equipment spending is rebounding more sharply than it previously anticipated. The brokerage highlighted accelerating investment from foundry, logic and memory customers as the principal drivers behind the revision.
Mizuho now projects global wafer fabrication equipment spending will expand 13% in 2026 and 12% in 2027, a notable acceleration relative to its prior outlook. The firm said that this faster growth trajectory should create meaningful upside for Applied Materials, which it identifies as the worlds second-largest supplier of chipmaking tools.
In outlining Applied Materials exposure to the improving cycle, Mizuho estimated that about 65% of the companys revenue is tied to foundry and logic customers, while roughly 29% is connected to DRAM. Those end-market exposures, the brokerage said, make the company particularly sensitive to a rebound in capital spending by major fabricators.
Mizuho singled out Taiwan Semiconductor Manufacturing Company as a key source of higher investment over the next several years. The brokerage forecast TSMCs capital expenditure in 2026 would rise about 32% year on year to $54 billion and then increase further in 2027. Those expectations, along with reportedly better-than-expected tool spending guidance from Intel and stronger demand related to high-bandwidth memory, were cited as supporting demand for Applied Materials advanced platforms.
The firm specifically noted the relevance of Applied Materials products used in leading-edge manufacturing - including gate-all-around and backside power delivery technologies - as well as advanced packaging solutions. According to Mizuho, these platforms are likely to benefit from the stronger tool spending it now expects.
At the same time, Mizuho emphasized that China continues to act as a headwind for Applied Materials, though the drag is moderating as spending outside China picks up. The brokerage estimated that Applied Materials China revenue would decline about 4% in 2026, while sales from other regions - which make up roughly 70% of the companys business - are expected to grow more rapidly.
Mizuho also anticipates that Chinas share of global wafer fabrication equipment spending will fall into the mid-20% range across 2026 and 2027, reducing the overall impact of the Chinese slowdown on Applied Materials growth. On that basis, the firm raised its revenue estimates above consensus, projecting approximately $2 billion of incremental sales in fiscal 2026 and more than $3 billion in fiscal 2027.
The new $370 price target reflects about 28.5 times projected 2027 earnings, a multiple Mizuho said is justified by the strong industry tailwinds despite near-term challenges in China and in mature chip markets.
Implications for markets and sectors
- Semiconductor equipment manufacturers stand to benefit from the upgraded spending outlook.
- Foundry and logic segments, plus memory markets such as DRAM and high-bandwidth memory, are central to the recovery Mizuho describes.
- Geographic shifts in spending - notably a reduced share for China - could reweight demand toward other manufacturing regions.