In the third decade of May, we have attempted to justify fundamentals under a potential rise of Applied Materials (AMAT) share price to the target around $250. Conclusions were based on the company’s beating expert pool estimates in both revenue and profit lines of its quarterly financial numbers, the company's own better projections and AMAT's universal integration to many manufacturing processes of Global Foundries, Huawei, Taiwan Semiconductor etc. Most of these chip production chains continued to grow fast. And so, AMAT shares already made it all the way from a $220 area, less than two month ago, to $255.

Some investment houses responded that premium valuations for AMAT and some other semiconductor equipment stocks are quite normal at current conditions and may lead to extra growth. The segment is up 46% year-to-date, exceeding the SOX index, Raymond James analysts wrote in a client's note. They are expecting "at least high-single digit growth in 2025/2026", citing "cyclical recovery, long-term demand for next-generation artificial intelligence (Gen AI), geopolitical tailwinds, and increased competition in the foundry space", also mentioning recent capex announcements by Micron Technology (MU) as a sign of "industry-wide investments". The group raised its price targets for Applied Materials to $275 from $235. MU price added 4% during the last trading day, widening its summer price rebound, with NVIDIA and AMD leaders rapidly gathering fresh bullish momentum as well.

We also believe that distributing money with a gradual movement of stop profit orders to levels 3-5% lower than the current ones and retaining at least half of previously purchased stake in AMAT looks an intuitively better solution than immediately closing highly profitable positions in the stock.