Mizuho Upgrades Applied Materials to Outperform, Citing Strong Global Chip Equipment Demand
In a significant vote of confidence for the semiconductor equipment sector, Mizuho Securities analyst Vijay Rakesh upgraded Applied Materials, Inc. (NASDAQ: AMAT) from Neutral to Outperform on January 27, setting a price target of $370. The move reflects a bullish outlook on global Wafer Fab Equipment (WFE) spending, with the firm anticipating a multi-year growth cycle.
Rakesh's analysis points to robust capital expenditure plans from key foundries, most notably Taiwan Semiconductor Manufacturing Company (TSMC). Mizuho forecasts TSMC's capex to surge approximately 32% year-over-year to $54 billion in 2026, with further increases expected in 2027. This spending wave, coupled with accelerating investments from U.S. and Japanese chipmakers, is seen as a primary tailwind for Applied Materials, the world's second-largest WFE supplier.
"We see global WFE spending accelerating to 13% year-over-year growth in 2026 and 12% in 2027," the analyst noted, marking an upward revision from prior forecasts. The firm also highlighted supportive trends beyond foundry logic, including better-than-expected tool spending guidance from Intel and surging demand for tools related to High-Bandwidth Memory (HBM) production, which now represents an estimated 30% of AMAT's revenue.
Another factor in the upgrade is the diminishing headwind from China. Mizuho observed that ex-China WFE revenues, constituting about 70% of the total, are now accelerating at a faster pace, reducing the sector's previous dependency on the Chinese market.
Applied Materials provides critical materials engineering solutions used to manufacture virtually every new chip and advanced display. The anticipated capex cycle from leading-edge manufacturers is expected to directly benefit demand for the company's advanced fabrication platforms.
Market Voices: Analysts and Investors Weigh In
Sarah Chen, Portfolio Manager at TechGrowth Capital: "This upgrade underscores a fundamental shift. We're not just looking at a cyclical uptick, but a structural expansion in equipment demand driven by AI, HBM, and geopolitical reshoring. AMAT is uniquely positioned across multiple key technologies."
Michael Rossi, Independent Semiconductor Analyst: "While the TSMC numbers are impressive, the real story is the breadth of demand. It's logic, it's memory, it's packaging. The entire toolchain is heating up, and Applied Materials has exposure to all of it. Mizuho's targets might even be conservative."
David Keller, editor of 'The Skeptical Investor' newsletter: "Here we go again—another analyst chasing momentum. They upgrade after a huge run, slap a sky-high price target on it, and ignore the cyclicality that has crushed this stock before. Everyone's talking about 2026 forecasts like they're guaranteed. What happens when the next inventory correction hits? This is a classic set-up for disappointment."
Priya Sharma, Senior Engineer at a leading fab: "From the ground level, the tool lead times are extending. The demand Mizuho is talking about isn't just theoretical; it's in the purchase orders. For companies like ours, securing capacity from AMAT and others is now a strategic priority."