Following ACM Research’s (ACMR Quick QuoteACMR - Free Report) preliminary first-quarter 2025 results released on April 29, market sentiment has been notably positive. The stock rose 5.1% the next day, buoyed by analyst optimism over the company’s robust preliminary revenue figures, indicating solid year-over-year growth of 8.4% to 11.7%, banking on sustained customer demand and a favorable product mix.

While shipments were expected to decline 36% to 37%, ACM Research attributed the softness to a temporary timing mismatch rather than a structural issue. The company also noted that combined total shipments for the fourth quarter of 2024 and the first quarter of 2025 are projected to increase 8% to 9% compared with the same periods a year earlier. Looking ahead, management expects shipment growth to return in the second quarter of 2025, benefiting from steady customer orders and ongoing expansion in the semiconductor industry.

ACMR Outperforms Industry, Sector, Peers and Benchmark

ACM Research stock has delivered a strong performance so far in 2025, rallying 28.6% and outperforming the Zacks Computer & Technology sector’s decline of 10.5% and the Zacks Semiconductor Equipment - Material Services industry’s return of 8%. The stock has also outperformed the S&P 500’s 5.4% dip during this period.

ACM Research shares have outperformed its peers, including Applied Materials (AMAT Quick QuoteAMAT - Free Report) and Lam Research (LRCX Quick QuoteLRCX - Free Report) . While Lam Research shares have dipped 0.5%, AMAT shares have declined 7.1% in the year-to-date period. Despite their established presence in wafer cleaning, deposition, and other fabrication processes, these companies have struggled amid broader industry headwinds.

A key reason for ACMR’s relative outperformance is its expanding market presence, particularly in China, supported by a growing customer base and a diversified product portfolio. However, the overall semiconductor industry continues to grapple with external pressure, most notably, trade tensions and protectionist policies.

YTD Price Comparison

Image Source: Zacks Investment Research

Trump Tariffs Cast Shadow Over Semiconductor Space

Despite strong long-term potential, semiconductor stocks are under pressure as Trump’s new tariffs raise fears of a prolonged trade war. Analysts warn that tariffs could drive up costs and dampen global electronics demand. Going by a Finimize report, these tariffs could slash over $1 billion from U.S. semiconductor suppliers' annual revenues. Major equipment makers like Applied Materials and Lam Research may each face up to $350 million in annual losses impacted by rising compliance costs and waning demand for older technologies in foreign markets.

This could also potentially hit ACMR in the near term.

Attractive Long-Term Potential                                                                     

Competitive Position in Cleaning: ACMR has established a strong competitive position in the wafer cleaning market, with its cleaning business generating $579 million in 2024, accounting for 74% of total revenues and reflecting 43% growth over 2023. The company now commands roughly 9% of the global wafer cleaning market, which has an estimated total addressable market of $6.5 billion. Backed by a comprehensive top-to-bottom cleaning portfolio, including solutions like SAPS, TEBO, Tahoe, SPM, and Bevel Etch, ACMR is well-positioned to continue expanding its market share both in China and internationally.

Image Source: ACMR's Q4 2024 Investors' Presentation

Diversified Portfolio Expansion: ACM Research is strategically diversifying its product portfolio beyond its core cleaning and plating segments, positioning the company to tap into a significantly larger $18 billion serviceable addressable market (SAM). New technologies like Furnace, Track, PECVD, and LPCVD are gaining traction, with furnace revenues expected to grow in 2025. The company is also advancing in next-gen packaging with tools like horizontal plating and vacuum flux cleaning, targeting high-demand areas such as GPUs and HBM.

ACMR Provides Optimistic 2025 Outlook

ACM Research remains optimistic about its 2025 outlook, with a focus on growth opportunities and market expansion.

For 2025, the company expects total revenues of $850-$950 million. ACMR increased its gross margin to 42-48% from the previously expected range of 40-45%, reflecting improved operational efficiency.

Attractive Valuation

ACM Research shares are cheap, as suggested by a Value Score of A.

In terms of the forward 12-month Price/Sales ratio, ACM Research is trading at 1.16, lower than the sector’s 5.60. 

ACMR is cheap at a forward 12-month Price/Sales of 4X compared with its peers like Applied Materials and LamResearch, which are currently trading at 4.13X and 4.98X, respectively.

Image Source: Zacks Investment Research

ACMR's Q1 Earnings Estimates Show Upward Movement

The Zacks Consensus Estimate for the first quarter of 2025 earnings (scheduled to be released on May 8) is pegged at 37 cents per share, indicating a 28.9% decline year over year. The figure, however, improved 19 cents over the past 90 days.

Image Source: Zacks Investment Research

Conclusion

ACMR has a Zacks Rank #3 (Hold) now despite strong stock performance and an attractive valuation because of ongoing risks. As stated earlier, tariff tensions could disrupt its China and U.S. operations. While new products like furnace and packaging tools are promising, they're still in early-stage. Investors may want to wait for more clarity on both geopolitical risks and product traction. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.