Chip-gear makers Applied Materials (AMAT) and Lam Research (LRCX) received upgrades from a Wall Street firm on Tuesday, sending their shares higher.

X Susquehanna Financial Group analyst Mehdi Hosseini upgraded shares of Applied Materials and Lam to positive from neutral. He raised his price target for Applied Materials to 72 from 60 and for Lam to 250 from 200.

Applied Materials shares were up 2%, near 54.50, in morning trading on the stock market today. Lam shares were up 2%, near 192.30 in early trading.

Hosseini said he is incrementally more positive on the semiconductor capital equipment market based on indications for “stable spending” through 2020. Applied Materials and Lam are both poised to benefit from continued strength in the memory chip market, he said.

End-market demand drivers include enterprise and cloud computing service providers, such as Alibaba (BABA) and Amazon (AMZN), which continue to build out their infrastructures, he said.

Applied Materials also is aided by equipment sales to display manufacturers, such as gear to make next-generation liquid crystal display (LCD) and organic light-emitting diode (OLED) panels, Hosseini said.


IBD’S TAKE: Lam Research is currently ranked No. 42 on the IBD 50 list of top-performing growth stocks.


Hosseini also reiterated his positive rating on chip-gear maker ASML Holding (ASML), which is scheduled to release its fourth-quarter financial results on Wednesday.

ASML was up 3.9%, near 188, in morning trading.

B. Riley FBR analyst Craig Ellis on Tuesday issued a positive report on Applied Materials. He reiterated his buy rating and price target of 71 on the stock.

However, Ellis kept his neutral rating on ASML with a price target of 166.

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