Applied Materials (AMAT) Stock Forecast for 2024, 2025, 2026. Sell or Buy?

Hunter Wolf Research, a respected name in financial analytics, presents a compelling analysis of AMAT stock, underpinned by a firm Bullish stance. With 103 publications over an eight-year period as a contributor, Hunter has demonstrated consistent dedication and expertise in the field. Garnering a substantial following of 1509 subscribers, his insights are notably influential. The author's credibility is bolstered by their standing, reflecting a high level of authority and trust in their market perspectives. As you delve into this review, anticipate well-founded arguments and reliable insights supporting the positive outlook on AMAT stock.

Key Theses of the Applied Materials Review

• Applied Materials is well-positioned in the semiconductor equipment market, particularly in DRAM, HBM, and advanced packaging.
• The company is expected to benefit from long-term growth tailwinds due to investments in advanced technologies and energy-efficient computing solutions.
• Recent financial results indicate 5.5% revenue growth and 7.4% adjusted operating profit growth, with a revenue forecast of $27 billion for FY24.
• Key risks involve customer concentration, volatility in the display market, and exposure to semiconductor industry CAPEX cycles.

Factors Influencing AMAT's Stock Price

DRAM and HBM markets are key growth drivers for AMAT, given the 50% year-over-year growth in DRAM and Micron's 50% sequential growth in HBM. These markets directly impact AMAT's revenues and margins due to the high demand for advanced memory solutions in AI workloads.

AMAT has been investing in Gate-All-Around transistors, backside power delivery, and advanced packaging, which are critical for capturing market share in advanced semiconductor nodes. These investments position AMAT to benefit from industry advancements and secure higher market share.

AMAT's focus on energy-efficient computing solutions, such as the Vistara platform and innovations in chip wiring, is aimed at reducing energy consumption by 30% by 2030. This focus aligns with the growing demand for cost-effective and power-efficient AI computing and data centers, providing long-term growth opportunities.

AMAT faces significant customer concentration risk with large clients like Samsung, TSM, and Intel. Losing any of these key clients could severely impact revenue, highlighting the importance of maintaining these relationships and diversifying the customer base.

The Display segment's revenue declined significantly in FY22 and FY23, demonstrating its vulnerability to market fluctuations. The segment's low contribution to total revenue mitigates the overall risk but indicates limited growth potential.

As a provider of semiconductor equipment and services, AMAT is sensitive to the CAPEX cycles of semiconductor companies. Economic downturns or reduced CAPEX spending could impact AMAT's financial performance, underscoring the importance of economic stability for the company's growth.

Commentary

The article highlights Applied Materials' potential in the semiconductor market, particularly in DRAM, HBM, and advanced packaging. The company's strategic investments in advanced technologies and energy-efficient computing solutions position it well to capture market share and benefit from industry advancements. Notably, the growth in DRAM and HBM markets significantly boosts AMAT's revenue and indicates a favorable trend in the short term. The average influence strength of these factors is relatively high, suggesting continued stock appreciation in the next 15 days.

However, there are also risks to consider, such as customer concentration and exposure to semiconductor CAPEX cycles. Losing key clients like Samsung, TSM, or Intel or experiencing reduced CAPEX spending could impact AMAT's financial performance. Despite these risks, the company's focus on disruptive technologies and market demands for efficient computing solutions offers long-term growth opportunities. The average influence strength indicates a bullish outlook for AMAT's stock in the coming month, making it a compelling investment for those considering long-term gains.

In the latest review of Applied Materials (AMAT) stock, Tech Stock Pros maintains a bullish stance, suggesting strong confidence in the stock's potential. The author’s insights carry significant weight, given their extensive track record of 423 publications since 2020 and a substantial following of 8,827 subscribers. This level of activity and engagement indicates that the author’s analyses are both popular and respected within the financial community. With a notable credibility level, readers can consider Tech Stock Pros’ perspectives on AMAT stock to be highly authoritative and well-informed. This review is poised to offer valuable insights for current and potential investors in the tech sector.

Key Theses of the Review

• AMAT's 3Q24 results and outlook suggest a soft back end of the year before significant outperformance in 2025.
• The anticipated WFE (Wafer Fabrication Equipment) rebound will occur in 2025 rather than 2024.
• Sales to China are expected to stabilize in the 30% range of total revenue, minimizing the impact in 2025.
• AMAT is poised to benefit from increased leading-edge WFE spending for foundry/logic and DRAM recovery in 2025.

Key Factors Influencing AMAT Stock Price

The decline of shipments to China, normalizing to around 30% of total revenue, will weigh on AMAT's financial performance in 2H24 but is not expected to impact 2025.

The WFE spend is a leading indicator for semiconductor demand. Growth of 7.5% in WFE in 2025 according to Gartner will significantly boost AMAT's performance.

Higher interest rates have hindered demand recovery in 2024, but potential rate cuts in September should benefit AMAT by supporting end-demand recovery in 2025.

AI-led demand, particularly for high-bandwidth memory, is crucial for the expected recovery in DRAM and NAND markets, boosting AMAT's sales potential in the category.

Weak demand for PCs and smartphones has suppressed WFE spending in 2024. An end-of-life cycle trigger for Microsoft Windows and improved interest rates in 2025 are expected to lead to a recovery.

Commentary

The article provides a bullish outlook for AMAT, highlighting a few significant factors. On average, these factors collectively suggest a moderate to strong influence on the company’s stock in the short term, with notable prospects for a substantial impact in 2025. The rising Wafer Fabrication Equipment (WFE) spending, particularly expected to grow by 7.5%, stands out as a crucial driver. The recovery in AI demand and potential end-of-life cycle triggers for PCs and smartphones also bolster AMAT's positive outlook.

While higher interest rates have muted demand in 2024, a possible rate cut could significantly lift AMAT’s performance next year. The stabilization in sales to China at around 30% of total revenue minimizes near-term concerns. Overall, these intertwined factors suggest a favorable environment for AMAT going into 2025, making it a promising buy.