12:53 PM EDT, 05/12/2026 (MT Newswires) -- Applied Materials (AMAT) is expected to post fiscal second-quarter results slightly above Wall Street's estimates and provide an upbeat third-quarter outlook amid robust dynamic random-access memory and high-bandwidth memory spending trends, RBC Capital Markets said in a note e-mailed Tuesday.

The brokerage projects the semiconductor equipment maker's second-quarter adjusted earnings at $2.64 a share on revenue of $7.65 billion, saying it expects a "slight"beat. Analysts polled by FactSet are looking for non-GAAP EPS of $2.68 and sales of $7.68 billion.

"DRAM spending trends remain strong on the back of extreme supply tightness and secular HBM demand,"RBC analyst Srini Pajjuri said in a note to clients. "We expect the trend to continue through the year as clean room space availability improves and from new greenfield projects in 2027."

RBC expects Applied Materials to issue third-quarter guidance 5% to 10% ahead of consensus estimates of $2.89 for adjusted EPS and $8.1 billion in revenue. The brokerage said this would be in line with peers Lam Research (LRCX) and Tokyo Electron and better than those of ASML (ASML) and KLA (KLAC).

"(Applied Materials') management typically doesn't offer explicit (wafer fabrication equipment, or WFE) projections, but previously guided for 20% growth in its systems business in (2026), which we believe is tracking ahead,"Pajjuri said.

RBC raised its price target on the Applied Materials stock to $500 from $430 while reiterating its outperform rating.

The company's shares were down 5.8% in Tuesday afternoon trade. The stock has jumped 63% so far this year.

Transition to gate all around -- a next-generation transistor architecture for smaller chips -- has been a "key driver"from the company, while Taiwan Semiconductor Manufacturing's (TSM) adoption of back-side power is projected to be a tailwind in the second half of this year, RBC said.

"Looking ahead, we expect WFE to grow at a double-digit pace for the next (two to three) years driven by (generative artificial intelligence), extreme tightness in DRAM, and growing competition in advanced foundry,"Pajjuri said.

Applied Materials is scheduled to report its latest results Thursday.

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