The stock of Applied Materials has performed well in this past year. This is due to the continued investments made into artificial intelligence. The stock price has increased by 18.57% this year, outperforming some top semiconductor companies such as Intel, AMD and Texas Instrument.
Applied Materials, a leading chip manufacturer
Applied Materials, a semiconductor leader, is less well-known than popular brands like Intel, Nvidia and AMD.
Its technology is important in today’s technology. It’s a leader in fields like chemical mechanical planarization (CMP), rapid thermal processing (RTP), and epitaxy.
Most semiconductor companies, such as Intel, Samsung Micron and SK Hynix, use these technologies.
Through its global applied services, it is also active in areas such as fab consultancy, automation software and technology-enabled service programs, supply chain assurance, etc.
Applied Materials also has a presence in the display sector, making products used for LCD, OLED and other display technologies, such as those found on TVs, smartphones and PCs.
The breadth of services offered by the company has led to a significant increase in its revenue over the last few years. The total revenue rose to $26 billion last year from $14.6 billion.
The company avoided large acquisitions and has grown organically. In 2020, it bought Kokusai Electric for $3.5 billion.
Demand for certain technologies increased. Artificial intelligence is the most recent technology, and it has boosted demand for AMAT products.
AMAT continues to grow steadily
Applied Materials continued to grow, according to the most recent financial reports. The revenues rose 5%, to $6.78 Billion.
This growth of $4.9 billion was mainly due to its semiconductor solutions, which includes its logic and foundry solutions. This division’s margin of operation dropped to just 34.8% in the third quarter.
The global services division, which grew in revenue to 1,58 billion dollars and its operating margins to 29,6%, was next.
The display division generated 251 million dollars in revenue and had an operating margin 6.4%.
Also, the company has raised its guidance for this quarter and next year. Analysts predict that the company’s quarterly revenue will be $6.95 Billion, which is a 3.4% rise from last year. The revenue for the entire year is expected to reach $27.05 Billion. Applied Materials’ performance has historically been better than analysts expected.
Risks ahead
Applied Materials is facing some challenges. There are some signs that AI investment will slow in the next few months. Goldman Sachs pointed out that the companies’ AI investments have increased at a moment when both demand and usage are not increasing as quickly.
This was the case during the Covid-19 Pandemic. The semiconductor shortage grew, and companies such as Texas Instruments and Analog Devices increased production. However, they still suffered from large inventories.
Analysts from Mizuho, Citi and other firms confirmed this view. They warned the industry could struggle if demand declines. Atif Malik is a Citi Analyst who has downgraded AMAT’s stock by 10%, to $217.
We now expect modest growth in wafer equipment of 5% by 2025, led by an increase of 10% for leading-edge logic and memory. Domestic China DRAM is down while NAND recovery has been pushed to the second half of 2025.”
Applied Materials, on the other hand, is less expensive than some chip manufacturers. The company has a P/E trailing ratio of 22,7 and an upcoming figure of 22,54. These are both lower than industry averages of 24,18 and 23.6.
Stock analysis of Applied Materials
TradingView AMAT Chart
The daily chart shows that AMAT’s share price reached a peak of $255 during July, and has since fallen below $200. The price has formed a double bottom pattern and hovers at the 200 day moving average. It has fallen below the 50 day moving average, and it is now between the Fibonacci Retracement points of 38.2% and 23,6%.
The stock is currently neutral. However, $212 and $172 are the two key levels to monitor. If the stock drops below $172, it will invalidate this double bottom pattern. This could lead to further downside. If the price rises above $212, it confirms that double bottom thesis and will lead to further gains.
The post Applied Materials Stock: Key AMAT Levels to Watch may change as new information unfolds
