Applied Materials shares gains after Morgan Stanley note

Applied Materials stock rose 3.8% in morning trading on Tuesday following a Morgan Stanley analyst note from Monday that presented mixed signals to investors.

Morgan Stanley cut its price target on the stock to $563 from $642 but raised its 2027 revenue and earnings per share forecasts. The bank maintained its long-term confidence in the company's earnings power despite lowering its valuation expectations.

The analyst reduced the valuation multiple to 22x from 26x, citing concerns that near-term positive factors are already reflected in the share price. The upward revision to 2027 estimates attracted buyers who saw the current price level as an entry point given the improved earnings outlook.

The stock remains below its 52-week high of $739.67, which appears to have drawn investors viewing the current level as a buying opportunity.

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