Applied Materials (AMAT.US) has a significant advantage at the technology inflection point, according to BofA, which has given it a "buy" rating.

Bank of America published a research report, giving Applied Materials (AMAT.US) a "buy" rating with a target price of $205.00. The bank noted that the company's expertise in material engineering positions it well to navigate the upcoming inflection point in wafer-level equipment technology.

Overall, while management did not provide specific guidance for the WFE market in 2025, they implied that the market size in the first and second quarters of 2025 could run around $105 billion.

In the advanced process manufacturing/logic field, Applied Materials is at an inflection point led by gate-all-around (GAA) and backside power technologies, with its SAM share expected to exceed 50%. Its market position in this field will be further solidified as its GAA sales double from $2.5 billion in fiscal 2024 to $5 billion this year.

Regarding the highly focused Chinese market, Bank of America believes that despite the decline in its sales contribution to 26% in the second quarter due to some export restrictions, it is expected to recover to its long-term level of 30% as the restrictions ease. The company continues to add new customers in the Chinese market, and most of the decline in its sales in the Chinese market is due to export restrictions rather than a slowdown in demand.

Overall, Bank of America believes that Applied Materials has significant advantages at the inflection point, with a solid market position in advanced process equipment, as well as strong growth potential in memory and advanced packaging, among others. Despite some short-term market volatility and external uncertainties, the company's long-term growth prospects remain optimistic.