Applied Materials Inc. (AMAT): Thoughts into and beyond the print

At current levels, AMAT is receiving limited credit for the cycle extending into 2028. We have questions about the sustainability of DRAM, but AMAT is not priced for that at current levels. Heading into the print we see three near-term debates: component shortages, DRAM customer cleanroom readiness and the CY27 outlook. Instead we focus on the 2027 debates that could shape AMAT stock and the broader SPE industry. On supply chain, OEMs have historically been able to pass through price hikes, but we are seeing DRAM pricing become a meaningful GM% headwind for process control and test. On DRAM, our view had been that DRAM WFE growth would decelerate into 2027 and undergrow WFE while bits accelerate; following recent earnings our bias is toward revising 2027 WFE growth higher due to a lower 2026 base, with bit growth potentially surpassing 40%, a tailwind for AMAT given share gains ex-EUV. Our JanQ forecast of $11.2bn may be toward the high end, and if the company meets our estimates we wo