Applied Materials Shares Drop as Evercore Cuts Price Target Despite AI Growth Plan

Shares of Applied Materials, Inc. (NASDAQ:AMAT) declined after investment firm Evercore ISI lowered its price target on the stock to $590 from $700, a 15.7 percent reduction, while maintaining an Outperform rating. The target cut followed the semiconductor equipment maker's outline of its long-term financial ambitions tied to expanding artificial intelligence infrastructure.

While artificial intelligence demand presents a substantial growth engine, high market valuations leave little margin for operational missteps. The company recently set targets for 2030 that include an adjusted gross margin of roughly 54 percent and an adjusted operating margin of 40 percent. Management also expects annual services revenue to surpass $12 billion by 2030, driven by over 20 percent growth in services during the current calendar year. However, expanding research and production capacity increases execution demands on management to keep costs under control.

Investors will monitor future quarterly results to assess whether artificial intelligence demand translates into sustained profit margins and steady services expansion. Meeting operating targets, which call for adjusted operating expenses of approximately 14 percent of revenue, will be critical to fulfilling market expectations.