UBS Raises PT on Applied Materials (AMAT) Stock, Maintains Neutral Rating

Applied Materials, Inc. (NASDAQ:AMAT) is one of the Most Undervalued Semiconductor Stocks to Buy According to Analysts. On August 4, UBS lifted the price target on the company’s stock to $185 from $175, while keeping a “Neutral” rating, as reported by The Fly. The firm’s analyst sees few surprises in Applied Materials, Inc. (NASDAQ:AMAT)’s print, and believes that Q3 2025 can come slightly ahead of the guidance. The company’s broad capabilities and connected product portfolio continue to fuel robust results in 2025 amidst the dynamic macro environment.

Furthermore, high-performance, energy-efficient AI computing happens to be the dominant driver of semiconductor innovation. Applied Materials, Inc. (NASDAQ:AMAT) is well-placed at the major technology inflections in fast-growing areas of the market, helping its multi-year growth trajectory. For Q3 2025, Applied Materials, Inc. (NASDAQ:AMAT) expects total net revenue of ~$7,200 (+/- $500 million), while its non-GAAP gross margin is anticipated to be 48.3%.

Amidst a dynamic economic and trade environment, Applied Materials, Inc. (NASDAQ:AMAT) didn’t witness changes to the customer demand and remains well-positioned to navigate evolving conditions with a strong global supply chain and diversified manufacturing footprint. Vltava Fund, an investment management company, recently published its Q4 2024 investor letter. Here is what the fund said:

“In the quarter just ended, we added to the portfolio two new companies from the technology sector: Applied Materials, Inc. (NASDAQ:AMAT) and Lam Research. Both are in the same industry as is another of our investments that we have held for some time, KLA Corporation. This industry is termed semiconductor devices and materials. One chapter in Hidden Investment Treasures is devoted to investing in technology companies and, among other things, the controversy over what really constitutes a technology company. As investors, we try to view technology companies not according to the industry into which they are formally classified but by whether the technologies and technological processes used in the production of their products and services are an essential element in value creation or if they are a source of long-term, sustainable competitive advantage. Among the companies that are formally categorized as technology-based and fall into either the Information Technology or the Communications Services sector, we find some that can be said to be just that but also others for which this classification is at least debatable. Similarly, among companies that do not formally belong to these two sectors, we find many that clearly are built to a large extent on technology and base their market positions and competitiveness on it. In the cases of Applied Materials and Lam Research, there can be no doubt that these are technology companies not only as a formality but also in fact.

Applied Materials provides manufacturing equipment, services, and software for the semiconductor, display, and related industries. Its principal business activities are semiconductor systems and Applied Global Services. Its largest customers are Samsung and Taiwan Semiconductors, but its overall clientele is more diversified than is that of Lam Research. At first glance, it would appear that Applied Materials has a somewhat less tangible and definable competitive advantage compared to KLA Corporation and Lam Research, but the numbers do not support such a view. Net margins likewise in the neighborhood of 27% and ROCE around 30% are outstanding. Basically, it can be said that all three companies we own have very similar underlying profitability metrics. Even their valuations, growth, and potential are similar. All have strong free cash flow and strong balance sheets, and they are regularly buying back their own shares over the long term and in large volumes…” (Click here to read the full text)

While we acknowledge the potential of AMAT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.