Bank of America's major adjustment! Rating changes for various chip stocks including Intel Corporation (INTC.US) and Applied Materials (AMAT.US)

Bank of America Corp recently adjusted the ratings of several semiconductor stocks, including Intel Corporation (INTC.US), Applied Materials (AMAT.US), Texas Instruments Incorporated (TXN.US), and others. Specifically, Bank of America downgraded its rating on Intel Corporation from "neutral" to "underperform the market," while maintaining a target price of $34. Analysts pointed out that Intel Corporation has seen its market value increase by $80 billion recently, reflecting expectations of improvements in its balance sheet and the potential of its external wafer fabrication business. However, analysts also emphasized that Intel Corporation's competitive prospects still face challenges, including a lack of a clear artificial intelligence (AI) product portfolio or strategy, insufficient competitiveness in server CPU products, and decreased flexibility in divesting loss-making manufacturing businesses compared to the past. Bank of America also downgraded Texas Instruments Incorporated's rating from "neutral" to "underperform the market," and lowered the target price from $208 to $190. Analysts noted that despite the company's high asset quality and stable execution, global tariff uncertainties may hinder demand recovery in the industrial sector in the short to medium term. Additionally, unlike some peers, Texas Instruments Incorporated has limited benefits in the current AI capital spending cycle. Bank of America also downgraded Graftech (GFS.US) from "neutral" to "underperform the market," with a target price of $35. Analysts stated that the downgrade reflects their assessment of short-term macroeconomic headwinds for Graftech, as well as adjusted earnings forecasts slightly below market expectations. Analysts believe that the $35 target price implies limited upside from current stock price levels. While there are no specific triggers for an immediate stock price decline, analysts pointed out that the company needs to demonstrate faster gross margin improvement and pricing power enhancement over the past two years to change market sentiment. Bank of America downgraded Axcelis Technologies (ACLS.US) from "neutral" to "underperform the market." Furthermore, Bank of America analysts expect the memory market to remain strong through 2026, with year-over-year growth of approximately 16%, mainly driven by NAND expansion projects and DRAM equipment investments rebounding. Recent increases in memory prices and capacity constraints may stimulate HBM and high-end memory production. Bank of America upgraded its rating on Applied Materials from "neutral" to "buy," with a target price raised to $250. Analysts noted that with the rebound in DRAM investments, the semiconductor equipment (WFE) market is expected to see its first strong growth in four years by 2026. In addition, the company's valuation is more attractive compared to large peers. Bank of America upgraded its rating on Camtek Ltd (CAMT.US) from "neutral" to "buy," with a target price raised to $135. Analysts stated that as demand for high-bandwidth memory (HBM) testing increases, the company's sales growth is expected to accelerate once again. It is worth mentioning that Bank of America also raised the target prices for Lam Research (LRCX.US), KLA Corporation (KLAC.US), Nova (NVMI.US), MKS Instruments (MKSI.US), and Teradyne, Inc. (TER.US). Bank of America pointed out that Lam Research remains its top pick among semiconductor equipment stocks due to its diverse capabilities that surpass WFE growth. Among small and mid-cap companies, Bank of America also favors MKS Instruments for its leverage on NAND and relatively reasonable valuation.