Jefferies raised its target price for AMAT, citing AI-driven demand for DRAM and advanced packaging equipment.

According to Mars Finance, on June 26th, Jefferies raised its price target for Applied Materials from $510 to $770 in its June 25th report, maintaining a "buy" rating. The reason given is that AI is driving increased manufacturing complexity in DRAM, HBM, and advanced packaging, thereby expanding AMAT's equipment market. AMAT closed at $668 in the previous trading day, meaning the new price target represents approximately a 15% upside. Jefferies also provided a bullish scenario at $900 and a bearish scenario at $500. The report states that DRAM is increasingly adopting advanced logic chip processes, including FinFET, CMOS Bonded Array, more EUV, and complex interconnects. This will improve deposition, etching, interconnect, and process control steps, enabling AMAT's DRAM serviceable market to grow from approximately $6 billion for the 6F² architecture to $6.5 billion for the 4F² architecture, and to approximately $7.5 billion for the 3D DRAM stage, based on 100,000 wafers per month of wafer capacity. HBM is another key driver. Jefferies states that HBM requires 3 to 4 times the wafer input to achieve equivalent bit shipments, thus amplifying actual equipment demand even with moderate DRAM bit growth. AMAT holds approximately 50% of the serviceable market share in HBM packaging-related equipment. Advanced packaging is also accelerating. Jefferies expects AMAT's advanced packaging business to grow by more than 50% this year, exceeding $2 billion in revenue; this business has already tripled between 2020 and 2024. Future growth will come from hybrid bonding, 3D/3.5D packaging, panel interposers, and CoPoS. The report specifically mentions the Kinex die-to-wafer hybrid bonding system, believing that AMAT will benefit from the expansion of AI accelerator package sizes and upgrades in packaging processes. Financially, Jefferies projects AMAT's EPS to be $14.01 in fiscal year 2026 and $18.06 in fiscal year 2027; revenues are projected at approximately $36.7 billion and $44.2 billion, respectively. The target price of $770 is based on a 2028 calendar year EPS of $21.25 and a P/E ratio of approximately 36x. Risks include a slowdown in capital expenditure by cloud vendors, stagnation in the wafer fab equipment market, AMAT losing market share in deposition/etching/process control, and poor execution of manufacturing process transformation.