Applied Materials' (AMAT) weakening position in China and the foundry and logic business are weighing on the medium-term growth outlook, BofA Securities said Friday in a report.

The company's elevated exposure to some oversupplied equipment markets and to customers including Intel (INTC) is amplifying cyclical pressures, BofA said.

BofA lowered its earnings estimates in fiscal 2026 by 9% and by 5% in 2027. Securing export licenses for China or an increase in Intel's capital spending, possibly supported by US government investments, may trigger an upside to Applied Materials' model, the report said.

"Indeed, while China has been lumpy, there is a scenario whereby it's flattish year-over-year in FY26, even while it's down 15% to 20% versus peak fiscal 2024," the report said.

BofA downgraded Applied Materials stock to neutral from buy and cut its price target to $180 from $190.

Shares of the company fell 13% in Friday trading.

Price: 163.41, Change: -24.84, Percent Change: -13.19