10:58 AM EDT, 05/15/2026 (MT Newswires) -- Applied Materials (AMAT) is expected to outperform the wafer fab equipment industry by more than 10 percentage points as it benefits from leading-edge logic strength and unprecedented DRAM demand, Morgan Stanley said Friday in a note.

The company noted that the 2027 WFE spending mix should continue to work in its favor, as leading-edge foundry/logic, DRAM, and advanced packaging are expected to account for over 80% of WFE spending growth, according to the firm. However, Morgan Stanley said it remains cautious on the company's position and models its 2027 systems shipments in-line with WFE growth at 28% versus 27%.

Despite management's conviction in its Process Control business, the brokerage is "not yet ready to give the company the benefit of the doubt and will be looking to be proven wrong,"according to the note.

The brokerage raised its 2026 EPS and revenue forecast to $13.74 and $36.4 billion from $12.63 and $34.7 billion, respectively. It also lifted 2027 estimates to $17.94 and $45.3 billion from $16.21 and $42.4 billion previously.

Morgan Stanley kept an overweight rating on Applied Materials and raised the price target to $502 from $455.

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