Mizuho has upgraded Applied Materials to Outperform, raising its price target to $370. The upgrade reflects an anticipated surge in semiconductor equipment spending, driven by investments in foundry, logic, and memory. Mizuho now projects a 13% rise in global wafer fabrication equipment spending in 2026, followed by a 12% increase in 2027, exceeding prior forecasts.

The brokerage anticipates that Applied Materials, a major supplier of chipmaking tools, will greatly benefit. Roughly 65% of its revenue is tied to foundry and logic customers while roughly 29% is linked to DRAM. Mizuho pointed to increased capital expenditures from Taiwan Semiconductor Manufacturing between 2026 and 2028, with TSMC's 2026 capex potentially rising 32% year-over-year to $54 billion.

China remains a headwind, but its impact is lessening as spending outside China accelerates. Mizuho predicts a modest 4% decline in Applied Materials' China revenue in 2026, while other regions experience faster growth. The firm's estimates suggest roughly $2 billion in incremental sales for fiscal 2026 and over $3 billion in fiscal 2027.

This positive outlook suggests strong industry tailwinds. Applied Materials' advanced platforms will likely see growing demand for leading-edge manufacturing, including gate-all-around and backside power delivery technologies, as well as advanced packaging. Investors should watch TSMC's spending plans closely as a key indicator of the sector's health and Applied Materials' future performance.