Goldman Sachs Lifts Applied Materials Target to $645 as AI-Driven DRAM Boom Extends Visibility Through 2028

Goldman Sachs Raises Applied Materials Price Target Amid Record Revenue and Multi-Year Order Visibility

Goldman Sachs has significantly increased its 12-month price target on Applied Materials (AMAT) to $645 from $520, reaffirming its buy rating on the semiconductor equipment giant as the company rides an accelerating wave of AI infrastructure spending and DRAM capacity expansion. The revision, reported by MarketScreener, came alongside a broader surge in analyst optimism following CEO Gary Dickerson's comments to Nikkei Asia about customer demand forecasts now extending two years or more into the future — with some projections reaching as far as 2030.

How Goldman Arrives at Its $645 Figure

The bank's methodology is notably focused on long-term durability rather than short-term momentum. Goldman applies approximately 32 times a normalized earnings figure of around $20 per share, according to Odaily — a valuation approach that rewards consistency over a single strong quarter. The firm projects non-GAAP earnings of $14.15 per share for Applied Materials in 2026, approximately 6% above the consensus estimate tracked by StockAnalysis.

That premium multiple reflects Goldman's view that Applied Materials is positioned to outgrow its peers this cycle, with order visibility now stretching into 2028 and potential pricing gains adding further upside to the revenue picture.

What Applied Materials Actually Does — and Why It Matters Now

Unlike chip designers that rise and fall with specific product cycles, Applied Materials manufactures the deposition, etch, and packaging equipment that fabrication plants use to build advanced semiconductors. This distinction is structurally important: AMAT generates revenue when the industry expands capacity, not when any individual chip succeeds in the market.

That business model effectively makes Applied Materials a broad proxy for capital spending across the entire semiconductor ecosystem — from DRAM and high-bandwidth memory fabs to leading-edge logic at the 2nm node and below.

The company's fiscal second quarter underscored the strength of that positioning. Applied Materials reported record revenue of $7.91 billion, up roughly 20% year-over-year, with earnings of $2.86 per share beating the $2.68 consensus estimate.

Key Growth Drivers Goldman Identifies

• DRAM and high-bandwidth memory buildouts, including new greenfield fabrication facilities supporting AI server demand
• Leading-edge logic at the 2nm generation and beyond
• Advanced packaging, where management has guided for more than 50% revenue growth in calendar year 2026

Stock Performance Has Already Been Extraordinary

Applied Materials shares opened near $627 on July 9, gaining roughly 6.8% on the session after Dickerson's remarks went public. Over the past month, the stock has climbed approximately 22%, and year-to-date in 2026, AMAT has surged around 127% — compared to roughly 10% for the S&P 500 over the same period.

Despite that run, the stock still sits about 18% below its 52-week high of $739.67, a detail that reflects both how far shares have come and how volatile the past year has been for semiconductor equities.

Goldman was not alone in responding to Dickerson's comments. TD Cowen raised its target to $700 from $525 on the same day, while Mizuho moved its target to $650, according to Nikkei Asia — signaling broad consensus that the multi-year demand story is credible.

The Broader Semiconductor Sector Context

Goldman's conviction on fundamentals comes paired with a note of caution on valuation timing. The bank's second-quarter semiconductor preview, cited by Odaily, acknowledges that most chip sub-sectors are likely to beat estimates this quarter — but flags that the Philadelphia Semiconductor Index has already gained roughly 88% versus about 14% for the S&P 500. When a sector moves that decisively ahead of the broader market, analysts note that strong results alone may not be sufficient to drive further outperformance.

The bar, in other words, has risen alongside the price.

Risks That Remain on the Table

Goldman explicitly names two risk factors that are not yet reflected in the stock's 127% year-to-date gain.

The first is regulatory exposure. Any tightening of export restrictions on advanced semiconductor tools would directly impact Applied Materials, which sells a significant portion of its equipment to customers in China, Taiwan, and South Korea. The company itself flags this risk in SEC filings.

The second is competitive pressure from domestic Chinese equipment suppliers, which have been steadily gaining market share. Each percentage point captured by local Chinese alternatives represents a reduction in Applied Materials' addressable market.

What to Watch Going Forward

Applied Materials is scheduled to report fiscal third-quarter results on August 13. Consensus estimates currently call for earnings of $3.39 per share on revenue of $8.94 billion, according to Blockonomi. That report will be closely watched as the first opportunity to confirm whether the multi-year demand commitments Dickerson described are translating into formally booked orders.

For the $645 Goldman target to hold, several conditions would need to remain in place: DRAM and HBM capacity plans would need to stay on schedule, advanced packaging would need to clear the 50% growth threshold management set for 2026, export rules would need to remain roughly stable, and hyperscaler capital spending would need to hold through the second half of the year.

The average price target across 29 analysts currently sits at approximately $617.21 — meaning the stock has already moved past the consensus view of fair value, even as individual analyst targets continue to reset higher.