Applied Materials Inc. (NASDAQ:AMAT) is the best-performing stock in the S&P 500 this month, surging about 54% in June.
It is a move with almost no precedent in the company’s history.
On Applied Materials’s monthly return record stretching back to the early 1970s, a single-month gain this large has happened only twice before — in January 1975 and May the same year.
That makes June 2026 the stock’s strongest month since 1975.
What’s Driving The AMAT Rally?
The simplest answer is the AI build-out. Applied Materials doesn’t make chips; it makes the machines that make them.
As the world’s second-largest semiconductor equipment supplier behind ASML Holding (NASDAQ:ASML), it sells the deposition, etch, ion-implantation and inspection tools that fabs need to produce advanced logic and memory.
Every additional wafer of high-bandwidth memory and AI logic that chipmakers commit to flows back to the equipment vendors that outfit those plants.
That demand is now showing up in the numbers analysts use.
The consensus next-12-month earnings estimate has climbed to roughly $14.77 per share, and the forward revenue estimate to about $38.4 billion — both revised sharply higher since the start of the year.
Notably, the upgrade in expectations came first; the share price spent the winter and spring catching up to an improving earnings outlook before the vertical move in June.
Wall Street Piles In
The estimate revisions have been followed by a wave of higher price targets.
In the back half of June, several firms lifted targets while keeping bullish ratings, according to Benzinga Analyst Ratings.
Cantor Fitzgerald raised its target to $850 (Overweight), B. Riley to $790 (Buy), Jefferies to $770 (Buy), KeyBanc to $750 (Overweight), Wells Fargo to $740 (Overweight) and BofA Securities to $720 from $540 (Buy).
BofA’s analyst Vivek Arya modeled earnings power of roughly $27 per share by 2028 — about 35% above current consensus — on expectations of broad equipment-share gains, particularly in DRAM, and gross margins pushing toward the mid-50% range.
| Firm | Analyst | Rating | Price Target | Implied Upside* | Date |
|---|---|---|---|---|---|
| Cantor Fitzgerald | C.J. Muse | Overweight | $650 → $850 | +18.7% | Jun 29 |
| B. Riley Securities | Craig Ellis | Buy | $550 → $790 | +10.3% | Jun 26 |
| Jefferies | Blayne Curtis | Buy | $510 → $770 | +7.5% | Jun 26 |
| KeyBanc | Steve Barger | Overweight | $550 → $750 | +4.7% | Jun 26* |
| Wells Fargo | Joe Quatrochi | Overweight | $715 → $740 | +3.3% | Jun 26 |
| BofA Securities | Vivek Arya | Buy | $540 → $720 | +0.5% | Jun 23 |
The Catch
The same rapid re-rating that powered the rally is also its main risk.
Applied now trades around 47 times forward earnings — close to twice its long-run average forward multiple of about 24.9x, and near the top of its historical range.
The price has effectively outrun even the upgraded estimates, and the most bullish targets lean on aggressive multi-year assumptions.
With the stock priced at roughly double its historical norm, there is little room for disappointment.
For now, Applied Materials embodies the 2026 AI trade in miniature: improving fundamentals and an enthusiastic sell side on one side, a stretched valuation and high embedded expectations on the other.
Image: Shutterstock
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