Investing.com -- KeyBanc Capital Markets upgraded Applied Materials (NASDAQ: AMAT ) and Lam Research (NASDAQ: LRCX ) to Overweight from Sector Weight following insights gathered at the 2025 Industry Strategy Symposium.

The bank’s analysts highlighted the companies' strong positioning in AI-related devices and advanced technologies as key drivers for future growth.

The firm maintains its 2025 Wafer Fab Equipment (WFE) outlook of approximately $108 billion, marking mid-single to high-single-digit growth from around $100 billion in 2024, with expectations for further growth in 2026 to $115 billion.

This optimism is driven by healthy spending on AI-related devices and leading-edge technology transitions.

KeyBanc upgraded Applied Materials to Overweight with a $225 price target, saying the company's focus on novel materials, advanced packaging, and improved chip efficiency positions it well for an AI-driven growth cycle.

Despite a 27% share price decline since July 2024, the analysts view this as a better alignment with current conditions and a strategic opportunity for long-term investors.

"While cyclical inflection in traditional, high-volume applications including mobile, PC/NB, and server is not yet apparent, recovery in those markets should also drive further revenue and EPS upside," wrote the analysts.

Lam Research was also upgraded to Overweight with a $95 price target. The analysts highlighted Lam’s focused strategy on memory market technology improvements and its advantage in DRAM, NAND, and Logic process transitions.

The rapid development of AI-related devices is expected to drive more high-bandwidth memory (HBM), benefiting Lam's tool offerings.

"We think Lam’s tools for TSV formation will be critical to advancing leading-edge roadmaps, resulting in sales growth and improving margins," the analysts stated.