Morgan Stanley raises AMAT target to $647, maintains Equal Weight

On July 6, Morgan Stanley raised its price target on Applied Materials, Inc. (NASDAQ:AMAT) to $647 from $502, though the firm maintained an "Equal Weight" rating on the shares. The upgrade came in the context of AMAT's long-term partnership with EssilorLuxottica, announced on June 16, to develop augmented reality display technology and AI glasses. According to the agreement, the two companies will focus research and development on advanced optical technologies and scale marketing of AI glasses.

EssilorLuxottica is already the market leader in AI glasses, powered by its long-standing partnership with Meta. The company sells smart glasses under the Ray Ban and Oakley brands and launched the Ray Ban Meta Display in 2025, marking its first display-equipped device. AI glasses are characterized by cameras, microphones, speakers, and voice assistants built into conventional frames; augmented reality functionality introduces additional optical design challenges.

Applied Materials plays a specialized role in this supply chain. The company manufactures the advanced semiconductor equipment required to produce the ultra-thin material layers that enable AR displays. Applied Materials itself is a materials engineering solutions provider for semiconductor manufacturing, operating through segments including Semiconductor Systems and Applied Global Services. The partnership with EssilorLuxottica directly ties AMAT's manufacturing capabilities to a major customer with established market leadership and production momentum. Despite the significant price target increase, Morgan Stanley's decision to hold an "Equal Weight" rating suggests the analyst believes other AI stocks offer greater upside potential and carry less downside risk than AMAT at current levels.

Applied Materials supplies a critical component in the emerging AI glasses supply chain: the specialized semiconductor equipment used to manufacture ultra-thin material layers for augmented reality displays. The company's June partnership with EssilorLuxottica, the market leader in AI glasses, marks a direct commercial link to one of the fastest-growing segments of AI hardware. EssilorLuxottica's existing dominance—built on its partnership with Meta and the Ray Ban brand—gives Applied Materials visibility into a large-scale customer with proven market traction. Morgan Stanley's July decision to raise its price target by $145 reflects confidence in this opportunity. However, the firm's decision to maintain an "Equal Weight" rating, rather than upgrade to "Overweight," suggests that even with this upside, the analyst believes competing AI stocks present better risk-adjusted returns. This mixed signal—a meaningful price target lift paired with a cautious rating—indicates that while the AR glasses opportunity is real, AMAT faces competitive or execution risks that temper enthusiasm relative to peers.

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