Semiconductor Equipment Stocks May Peak in Late 2026, BNP Paribas Says
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 days ago
0mins
Should l Buy AMAT?
Source: seekingalpha
- Price Surge Analysis: According to BNP Paribas, semiconductor equipment stocks have rallied twofold in the past six months, with the price increase closely tied to rising memory prices, where 64% of the increase stems from multiple expansions, indicating market optimism about the sector.
- Historical Cycle Reference: Analyst David O’Connor notes that historical cycles show stock prices peak three quarters after multiples peak, suggesting the current cycle may peak in late 2026 or early 2027, indicating a potential 50% correction risk ahead.
- Memory Price Forecast: O’Connor highlights that in the last two corrections (the 2017 cloud cycle and the 2021 COVID cycle), memory prices fell by an average of 55%, while semiconductor stock prices dropped by 43%, suggesting a similar memory price correction could occur in the second half of 2027.
- PE Ratio Trends: Currently, semiconductor companies are trading at record high PE ratios, expected to peak in Q2 2026, which may lead to compression risks affecting future stock performance.
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Analyst Views on AMAT
Wall Street analysts forecast AMAT stock price to fall
22 Analyst Rating
18 Buy
4 Hold
0 Sell
Strong Buy
Current: 338.550
Low
190.00
Averages
288.05
High
425.00
Current: 338.550
Low
190.00
Averages
288.05
High
425.00
About AMAT
Applied Materials, Inc. is a materials engineering solution company. The Company provides equipment, services and software to the semiconductor, display, and related industries. It operates in three segments: Semiconductor Systems, Applied Global Services (AGS), and Display. The Semiconductor systems segment designs, develops, manufactures and sells a range of primarily 300 mm equipment used to fabricate semiconductor chips, also referred to as integrated circuits (ICs). The AGS segment provides services, spares and factory automation software to customer fabrication plants globally. The AGS segment also manufactures and sells 200mm and other equipment. The Display segment is comprised primarily of products for manufacturing liquid crystal displays (LCDs), organic light-emitting diodes (OLEDs), and other display technologies for televisions, monitors, laptops, personal computers (PCs), tablets, smartphones, and other consumer-oriented devices.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Price Surge Analysis: According to BNP Paribas, semiconductor equipment stocks have rallied twofold in the past six months, with the price increase closely tied to rising memory prices, where 64% of the increase stems from multiple expansions, indicating market optimism about the sector.
- Historical Cycle Reference: Analyst David O’Connor notes that historical cycles show stock prices peak three quarters after multiples peak, suggesting the current cycle may peak in late 2026 or early 2027, indicating a potential 50% correction risk ahead.
- Memory Price Forecast: O’Connor highlights that in the last two corrections (the 2017 cloud cycle and the 2021 COVID cycle), memory prices fell by an average of 55%, while semiconductor stock prices dropped by 43%, suggesting a similar memory price correction could occur in the second half of 2027.
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- Strong Labor Market Data: Initial jobless claims in the US rose by 5,000 to 210,000, aligning with expectations, while continuing claims fell by 32,000 to a 1.75-year low of 1.819 million, suggesting a robust labor market that could influence a hawkish stance from the Fed.
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- OECD Inflation Forecast Raised: The OECD increased its G-20 inflation forecast for 2026 from 2.8% to 4.0%, reflecting the potential economic impacts of the war in Iran, which may lead investors to reassess market risks.
- Escalating Tensions in the Middle East: Saudi Arabia's agreement to allow U.S. military access to King Fahd Air Base signals increased regional pressure on Iran, potentially leading to broader military conflict that could further disrupt global oil and gas supply chains.
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- Market Weakness: The S&P 500 index fell by 1.74%, the Dow Jones Industrial Average dropped by 1.01%, and the Nasdaq 100 hit a 6.5-month low, reflecting investor concerns about future economic prospects amid rising oil prices.
- Surging Oil Prices: WTI crude oil prices surged over 4% due to reports of potential military action against Iran by the Pentagon, which heightened inflation expectations and increased pressure on the stock market.
- Strong Labor Market Data: Initial jobless claims rose by 5,000 to 210,000, in line with expectations, while continuing claims fell by 32,000 to a 1.75-year low of 1.819 million, indicating labor market strength that could influence Federal Reserve policy.
- International Economic Impact: The OECD raised its G-20 inflation forecast for 2026 to 4.0%, reflecting the potential global economic impact of the Iran war, with increasing market concerns about escalating tensions in the Middle East that could disrupt global supply chains.
See More
Apple Expands U.S. Manufacturing Partnerships with New Suppliers
- Increased Manufacturing Partnerships: Apple has announced the addition of new partners including Qnity Electronics, Cirrus Logic, Bosch, and TDK to its American Manufacturing Program, planning to invest $400 million by 2030, which enhances its supply chain localization and strengthens U.S. manufacturing competitiveness.
- Strategic Investment Commitment: Apple's commitment to invest $500 billion in 2025, with an additional $100 billion, underscores its long-term dedication to the U.S. market, aiming to mitigate supply chain risks and enhance brand image through localized production.
- Critical Component Supply: Qnity's involvement highlights its importance in the semiconductor supply chain, as Apple relies on its specialized chemicals and materials, ensuring a stronger partnership with TSMC and enhancing Apple's competitive edge in chip manufacturing.
- Enhanced Market Competitiveness: Qnity's stock remains cheaper compared to its main rival Entegris, trading at less than 32 times earnings estimates, indicating strong future earnings growth potential, with Apple's backing further solidifying its market position.
See More
Market Declines Amid Uncertainty Over Iran Conflict
- Market Sentiment Decline: The market is experiencing a downturn due to ongoing uncertainty surrounding the Iran conflict, with the S&P 500 failing to gain on Fridays since the conflict began, indicating investor caution about potential developments over the weekend.
- Energy Stocks Surge: Energy stocks are performing well as WTI crude oil prices jumped 5% to over $95 per barrel, demonstrating that investors are still seeking safe havens amid fears of an economic slowdown.
- Memory Stocks Under Pressure: Memory and related equipment stocks are facing a sell-off for the second consecutive day after a Google researcher announced a new method to optimize memory in large language models, with Morgan Stanley describing the selling as a “healthy pricing in of durability concerns” and asserting that memory remains a bottleneck in AI development.
- Consumer Sentiment Data: The final read on the University of Michigan consumer sentiment survey and one-year inflation expectations will be released on Friday, with the market closely monitoring these figures for their potential impact on investor sentiment.
See More
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- Price Surge Analysis: According to BNP Paribas, semiconductor equipment stocks have rallied twofold in the past six months, with the price increase closely tied to rising memory prices, where 64% of the increase stems from multiple expansions, indicating market optimism about the sector.
- Historical Cycle Reference: Analyst David O’Connor notes that historical cycles show stock prices peak three quarters after multiples peak, suggesting the current cycle may peak in late 2026 or early 2027, indicating a potential 50% correction risk ahead.
- Memory Price Forecast: O’Connor highlights that in the last two corrections (the 2017 cloud cycle and the 2021 COVID cycle), memory prices fell by an average of 55%, while semiconductor stock prices dropped by 43%, suggesting a similar memory price correction could occur in the second half of 2027.
- PE Ratio Trends: Currently, semiconductor companies are trading at record high PE ratios, expected to peak in Q2 2026, which may lead to compression risks affecting future stock performance.
See More
US Stocks Under Pressure Amid Soaring Oil Prices
- Oil Price Surge Pressures Markets: Amid escalating uncertainty regarding Iran, WTI crude oil prices rose over 3%, contributing to a 0.64% drop in the S&P 500, a 0.16% decline in the Dow Jones, and a 1.05% fall in the Nasdaq 100, indicating market sensitivity to geopolitical risks.
- Strong Labor Market Data: Initial jobless claims in the US rose by 5,000 to 210,000, aligning with expectations, while continuing claims fell by 32,000 to a 1.75-year low of 1.819 million, suggesting a robust labor market that could influence a hawkish stance from the Fed.
- OECD Raises Inflation Forecast: The OECD increased its G-20 inflation forecast for 2026 from 2.8% to 4.0%, reflecting the potential economic impact of the Iran conflict, which may heighten investor concerns about future economic growth.
- Chip Makers Under Pressure: A new compression technique proposed by Google researchers, which could reduce memory requirements for AI workloads, has led to declines of over 5% in several chip manufacturers' stocks, further exacerbating overall market weakness.
See More
Surging Oil Prices Trigger Market Volatility
- Oil Price Surge: WTI crude oil prices rose over 4% today as the Pentagon develops military options against Iran, raising concerns about future supply disruptions and contributing to a 0.50% decline in the S&P 500 Index.
- Labor Market Stability: Initial jobless claims in the U.S. rose by 5,000 to 210,000, aligning with expectations, while continuing claims fell by 32,000 to a 1.75-year low of 1.819 million, indicating resilience in the labor market despite cautious economic outlooks.
- OECD Inflation Forecast Raised: The OECD increased its G-20 inflation forecast for 2026 from 2.8% to 4.0%, reflecting the potential economic impacts of the war in Iran, which may lead investors to reassess market risks.
- Escalating Tensions in the Middle East: Saudi Arabia's agreement to allow U.S. military access to King Fahd Air Base signals increased regional pressure on Iran, potentially leading to broader military conflict that could further disrupt global oil and gas supply chains.
See More
