UBS Raises Target Prices for CEVA/AMAT/MRVL, Bullish on AI and Memory Cycle

Overview

This report is UBS’s earnings preview for four key U.S. semiconductor and semiconductor equipment companies: CEVA, Ambiq, Applied Materials, and Marvell Technology. The core conclusion is a positive outlook on structural growth opportunities in the semiconductor industry, particularly driven by AI data centers, Apple’s internal modem substitution, and the recovery of the DRAM memory cycle. UBS significantly raised target prices for CEVA, AMAT, and MRVL based on enhanced confidence in long-term revenue visibility and strategic relevance, while also raising Ambiq’s target price despite its lack of current profitability to reflect its long-term potential.

Core views

CEVA (CEVA.US): Despite downward revisions to global smartphone sales forecasts, UBS believes increased adoption of Apple’s internal modem (C1x) will offset negative impacts. The C1x is already used in the new iPad Air and entry-level iPhone 17e, offering significantly improved performance. Additionally, Renesas’ adoption of CEVA’s AI DSP/NPU technology in the Toyota RAV4 validates its competitiveness in automotive applications. UBS maintains its 2026/2027 forecasts unchanged but raises the target price from $27 to $42, based on a 49x P/E multiple for 2027. Ambiq (AMBQ.US): Q1 results are expected to meet or slightly exceed expectations, with strong demand from wearables (e.g., Garmin) supporting growth. Although the Atomiq and Apollo projects remain in early R&D stages, they support a path to profitability by 2028. Given peer valuation re-rating, UBS increases the EV/Sales multiple from 4.2x to 6.0x, raising the target price from $32 to $43 while maintaining a Neutral rating, as current valuation already reflects long-term opportunity. Applied Materials (AMAT.US): Q2 revenue is forecast at $7.71 billion, above the midpoint of guidance, with further upside potential in Q3 guidance. The primary driver is surging DRAM investment, with 2026 DRAM WFE market size expected to grow 23% YoY to $37.3 billion. As a key beneficiary, AMAT’s market share is poised to rebound. UBS significantly raises EPS forecasts for 2026–2028 and lifts the target price from $430 to $480, based on a 22x P/E multiple for 2027. Marvell Technology (MRVL.US): UBS has turned more positive on MRVL, primarily due to continued tailwinds from the Amazon supply chain and rising demand for optical products. UBS notes that MRVL management’s revenue guidance for Microsoft’s Maia 3 chip ($700 million) appears conservative; UBS analysis suggests potential shipments of 500,000 units, implying revenue exceeding $2 billion. Furthermore, AWS’s adoption of NVLink in Trainium 4 will expand MRVL’s share in the high-speed switch market. UBS significantly raises 2028 revenue/EPS forecasts to $20.4 billion/$8.35 and lifts the target price from $120 to $195, based on a 23x P/E multiple for 2028.

Analysis framework

UBS combines bottom-up fundamental analysis with top-down industry cycle assessment. For IP and design companies (CEVA, Ambiq, MRVL), the focus is on product penetration rates and supply chain feedback from major customers (Apple, Microsoft, Amazon), revising revenue models by deconstructing potential sales volumes of specific blockbuster products (e.g., iPhone modems, Maia chips). For equipment makers (AMAT), the analysis closely tracks macro trends in wafer fab equipment (WFE) spending, especially capex cycles for DRAM and logic chips, and validates shipment forecasts through supply chain checks. Valuation methodologies differ by company stage: P/E for mature firms and EV/Sales for growth-stage companies, calibrated against peer-weighted average multiples.

Methodology notes

• Valuation MethodPE/PEG valuation

  Price-to-Earnings Valuation

  For companies with stable profitability (e.g., CEVA, AMAT, MRVL), the report uses forward P/E multiples multiplied by EPS forecasts to derive target prices. For example, AMAT is assigned a 22x P/E for 2027, reflecting its strong positioning in the DRAM supercycle.

• Valuation MethodPS valuation

  Price-to-Sales / Enterprise Value-to-Sales Valuation

  For unprofitable or early-stage high-growth companies (e.g., Ambiq), the report uses EV/Sales multiples. Since these companies have negative profits and cannot be valued via P/E, revenue growth better reflects market expansion and future profit potential.

• Industry/Value Chain FrameworkUpstream-Midstream-Downstream Transmission

  Downstream Demand Driving Upstream Equipment

  The report analyzes demand transmission from end applications (e.g., AI servers, smartphones) to chip design (MRVL, CEVA) and then to manufacturing equipment (AMAT). For instance, increased AI chip demand from Microsoft and Amazon directly boosts MRVL’s optical and custom chip businesses, which in turn drives AMAT’s equipment orders.

• Cycle & Sentiment FrameworkCapacity/Equipment Cycle (Juglar)

  Semiconductor Capital Expenditure Cycle

  The report focuses on the DRAM industry’s capital expenditure (Capex) cycle. It argues that high profitability in the memory sector will buffer capex, with DRAM WFE spending expected to surge in 2026–2027, driving AMAT into an earnings upcycle.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• CEVA (US.CEVA)

  Beneficiary: Rising Apple modem penetration and automotive AI DSP demand

  Strengths

  Performance advantage of Apple C1x modem in iPad and iPhone; design win with Renesas in Toyota vehicles

  Weaknesses

  Downward revision in global smartphone sales outlook

  Comparison

  Compared to pure-play mobile IP vendors, CEVA has more diversified growth drivers in automotive and edge AI

  Risks

  Slower-than-expected adoption of Apple’s internal modem; slow progress in NPU licensing

• Ambiq Micro (US.AMBA)

  Beneficiary: Strong demand for premium wearable devices

  Strengths

  Significant revenue growth from Garmin’s fitness business; ultra-low-power technology barrier

  Weaknesses

  Not yet profitable; profitability expected only in 2028; Atomiq commercialization still early

  Comparison

  Valuation multiple raised alongside peers, but lacks near-term profitability proof points

  Risks

  Slow adoption of edge AI applications; slower-than-expected new customer acquisition

• Applied Materials (US.AMAT)

  Beneficiary: DRAM capex supercycle

  Strengths

  Leadership in PVD equipment; direct beneficiary of rising DRAM WFE spending share

  Weaknesses

  Potential negative impact from Samsung’s OLED capex cuts

  Comparison

  Compared to other equipment makers, AMAT has greater exposure and higher elasticity to the DRAM segment

  Risks

  Memory industry capex cuts; changes in export control policies

• Marvell Technology (US.MRVL)

  Beneficiary: Surging AI data center optical interconnect and custom ASIC demand

  Strengths

  Microsoft Maia chip potential shipments far exceed guidance; AWS Trainium 4 adopts NVLink technology

  Weaknesses

  Legacy carrier and enterprise networking businesses growing relatively slowly

  Comparison

  Compared to Broadcom, MRVL offers higher growth elasticity in custom chips for specific cloud customers

  Risks

  Delays in cloud customers’ in-house chip development; intensified competition leading to market share loss

Key data

• CEVA Target Price$42Raised from $27, based on 49x P/E for 2027
• Ambiq Target Price$43Raised from $32, based on 6.0x EV/Sales for 2027
• AMAT Target Price$480Raised from $430, based on 22x P/E for 2027
• MRVL Target Price$195Raised from $120, based on 23x P/E for 2028
• AMAT 2027E EPS$21.28Sharply raised from $16.48
• MRVL 2028E EPS$8.35Raised from $7.49
• DRAM WFE Spending Share>50%DRAM expected to account for over 50% of total WFE spending in 2026

Impact & implications

The report argues the semiconductor industry is benefiting from a dual tailwind of AI and memory recovery. For investors, AMAT is the most direct beneficiary of surging DRAM capex; MRVL holds a critical position in cloud giants’ custom chip wave, particularly in optical interconnects and custom ASICs, with the market underestimating its Microsoft-related upside; CEVA is transitioning from smartphone dependency to diversified, high-value markets through gradual Apple modem adoption and automotive AI. Although Ambiq remains unprofitable in the near term, its strategic positioning in edge-AI wearables grants it long-term optionality.

Risks

• Macroeconomic recession leading to end-customer demand destruction
• Memory industry capex cuts
• Slower-than-expected adoption of Apple’s internal modem
• Slow rollout of edge AI applications
• Export controls and geopolitical risks

What to watch

• CEVA: Actual penetration rate of Apple modems in new iPhone models; automotive NPU licensing announcements
• Ambiq: Sampling progress for Atomiq/Apollo 6; pilot design wins in non-wearable segments
• AMAT: Actual realization of DRAM WFE spending; development of China’s domestic WFE market
• MRVL: Actual shipments of Microsoft Maia 3 chips; incremental switch business from AWS NVLink adoption