There was no better sector to be in than semiconductors earlier in 2026. That was then, and at the start of August the sector remains in a downtrend, and most chip-related stocks are down close to even worse than 20% from their peak in late-June. Wall Street is starting to pick through the stocks that have sold off the most to see if there are any oversold stocks that are in the investor buying bin on aisle-12.
It turns out that Applied Materials Inc. (AMAT) may be one of the leading chip stocks in that oversold buying bin for investors. That certainly doesn’t mean that the stock cannot continue selling off, and the world of AI-demand and semiconductors can always run into more headwinds. Still, one driver that has been seen is a robust capital spending market in anything tied to or even related to AI. That’s good for the chip business!
Whether or not it’s now time for Applied Materials to recover is not up to Oggonomics to decide. That’s the take seen from two fresh analyst upgrades on August 3 and a slew of price target hikes seen during July after the major chip sell-off began.
Applied Materials is a global leader in materials engineering solutions and in the capital equipment side for companies around the world that who need critical wafer fabrication tools to manufacture semiconductors. If capital spending remains strong (as it is expected to), a simpleton view is that should be good news for Applied Materials. Apparently Wall Street analysts also believe this will be good for Applied Materials.
RELATIVE PERFORMANCE
Before getting into just how oversold or “bargain bin” levels the stock is, the key VanEck Semiconductor ETF (SMH) that tracks the entire semiconductor space (with $68 billion in assets) was last seen down 19% from its peak in late July. Even then, the SMH ETF is still up 52% since the end of 2025 and up 92% from a year ago.
Applied Materials Inc. (AMAT) has performed even worse than the key SMH ETF at that June peak. AMAT shares have plunged from nearly $740 at its peak down to $507 on last look — -31% versus the ETF performance of -19% since its peak. That’s not a normal disparity.
Oggonomics wants to look under the hood to see what’s driving all this interest from Wall Street analysts. Just don’t forget that these analyst calls are all from the firms mentioned by name. Oggonomics makes no formal ratings and does not issue price targets of its own. And any seasoned investor knows that analysts can be wrong, fundamentals can change and that they issue no money-back guarantees if the stock loses money or underperforms expectations.
WHO UPGRADED AMAT?
Applied Materials was just added to Goldman Sachs’ U.S. Conviction List in the August update, reiterating its Buy rating with a $645 price target. Goldman Sachs believes Applied is well positioned to gain market share in the large DRAM makers and also at large foundries like Taiwan Semi based on the AI-led semiconductor demand trends.
Citigroup also jumped in Applied Materials with an “upside 30-day catalyst watch.” The firm has a Buy rating and $710 price target. Citi expects that Applied Materials will raise its guidance to above-consensus for its October quarter based on the same strong AI and semiconductor trends.
While two key analyst calls in a single day is not eerily unusual, multiple analysts on Wall Street have been raising their price targets in recent weeks even as the shares slid lower. Here are some summaries of analyst price target hikes since the start of July:
- 7/15 — UBS (Buy) target to $705 from $570
- 7/10 — Stifel (Buy) target to $650 from $530
- 7/10 — Needham (Buy) target to $730 from $540
- 7/09 — Mizuho (Outperform) target to $650 from $540
- 7/06 — Morgan Stanley ((Equal-Weight) target to $647 from $502
Investors should also consider that Applied Materials’ top two customers in fiscal 2025 accounted for 19% and 15% of their total business. Again, investors should always keep all of the risks in mind. No analyst report, or two reports, should ever be the sole reason to buy or sell a stock.
