Applied Materials (AMAT) Stock: Downgraded to Neutral as Competition Rises in China

Applied Materials, Inc. (NASDAQ:AMAT) is one of the AI Stocks in the Spotlight for Investors. On September 11, Mizuho analyst Vijay Rakesh downgraded the stock from Outperform to Neutral with a price target of $175.00 (from $200.00).

The firm cited intensifying competition in China and technology transitions that may erode the company’s market share. It noted that AMAT is losing market share in Sputtering/PCVD where it is heavily exposed. Meanwhile, China’s domestic suppliers are gaining share and putting pressure on AMAT’s position.

“AMAT exposed to PVD/Sputtering, Plasma CVD, and 28nm+ Conductor Etch (~60% of Revs for AMAT, but only 40% of Revs for LAM), losing share. We believe the largest share shifts are happening in Sputtering/PCVD where AMAT’s revenue share is ~47% while LRCX less exposed at ~15%. China Domestic OEMs like Naura and AMEC are gaining Share in PVD (Naura gaining ~2-5pts/yr as AMAT loses 2-4pts), legacy 28nm etch nodes (Naura/AMEC gaining ~2ppt from AMAT/LRCX), and Plasma CVD as AMAT is potentially losing share as customers SMIC/YMTC ramp domestic CN WFE suppliers.”

Applied Materials, Inc. (NASDAQ:AMAT) is a leader in materials engineering solutions engaged in the provision of manufacturing equipment, services, and software to the semiconductor, display, and related industries.

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.

READ NEXT: 10 AI Stocks You Should Not Ignore and 10 AI Stocks Analysts Say You Should Watch Closely.

Disclosure: None.