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AMAT's Logic & DRAM Offerings Gain Traction: How Long Will it Sustain?
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Key Takeaways
Applied Materials' Logic and DRAM units gain from rising AI infrastructure demand.
Logic revenues are driven by GAA transition, backside power delivery and metal deposition.
DRAM sales up 50% YoY, with strong HBM and vertical transistor growth expected into fiscal 2026.
Applied Materials’ (AMAT - Free Report) Logic and DRAM businesses are gaining traction on the back of rising demand for AI infrastructure. On fiscal third-quarter 2025 earnings call, AMAT highlighted its leadership in both Logic and DRAM segments, each driven by major semiconductor transitions.
In Logic, AMAT’s revenues are driven by the shift from FinFET to Gate-All-Around (“GAA”) transistors and backside power delivery, with strong metal deposition accounting for approximately $1.2 billion.
Moreover, AMAT reported that it is in the phase of early molybdenum deposition wins. The company is building its capacity to deliver approximately 100,000 GAA wafers per month, with full-scale ramps expected in 2026-2027. AI workloads are driving full utilization at leading-edge nodes and long-term market share gains.
DRAM revenues grew approximately 50% year over year in the third quarter of fiscal 2025, surpassing $1 billion in etch sales, with next-gen gap fill ("CVD") and dielectric patterning wins positioning Applied for vertical transistor and HBM growth, expected to continue robustly through fiscal 2026.
AI demand boosts both segments, including advanced logic for energy-efficient compute and HBM for memory bandwidth, while AMAT’s co-innovation and materials expertise reinforce its competitive edge.
How Competitors Fare Against AMAT
Lam Research (LRCX - Free Report) secured multiple critical etch wins at a major DRAM manufacturer with its new Akara etch system, which supports 3D DRAM architectures. This was supported by LRCX’s customer investments in DDR5, LPDDR5 and high-bandwidth memory. Additionally, Lam Research’s Aether dry-resist technology was recently selected as the production tool of record for a leading DRAM customer, securing a foothold in this high-growth segment.
ASML Holding (ASML - Free Report) is experiencing strong demand from DRAM and logic customers, which are ramping leading-edge nodes using ASML’s NXE:3800E EUV systems. Additionally, ASML noted that multiple DRAM customers are adopting EUV lithography, which helps in shortening cycle time and lowering costs.
AMAT’s Price Performance, Valuation and Estimates
Shares of Applied Materials have gained 34.9% year to date compared with the Electronics - Semiconductors industry’s growth of 41.3%.
Image Source: Zacks Investment Research
From a valuation standpoint, Applied Materials trades at a forward price-to-sales ratio of 6.03X, lower than the industry’s average of 9.55X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Applied Materials’ fiscal 2025 earnings implies year-over-year growth of 8.21%. The estimate for fiscal 2025 has been revised dpwnward in the past 30 days.
Image Source: Zacks Investment Research
Applied Materials currently carries a Zacks Rank #4 (Sell).
Image: Bigstock
AMAT's Logic & DRAM Offerings Gain Traction: How Long Will it Sustain?
Key Takeaways
Applied Materials’ (AMAT - Free Report) Logic and DRAM businesses are gaining traction on the back of rising demand for AI infrastructure. On fiscal third-quarter 2025 earnings call, AMAT highlighted its leadership in both Logic and DRAM segments, each driven by major semiconductor transitions.
In Logic, AMAT’s revenues are driven by the shift from FinFET to Gate-All-Around (“GAA”) transistors and backside power delivery, with strong metal deposition accounting for approximately $1.2 billion.
Moreover, AMAT reported that it is in the phase of early molybdenum deposition wins. The company is building its capacity to deliver approximately 100,000 GAA wafers per month, with full-scale ramps expected in 2026-2027. AI workloads are driving full utilization at leading-edge nodes and long-term market share gains.
DRAM revenues grew approximately 50% year over year in the third quarter of fiscal 2025, surpassing $1 billion in etch sales, with next-gen gap fill ("CVD") and dielectric patterning wins positioning Applied for vertical transistor and HBM growth, expected to continue robustly through fiscal 2026.
AI demand boosts both segments, including advanced logic for energy-efficient compute and HBM for memory bandwidth, while AMAT’s co-innovation and materials expertise reinforce its competitive edge.
How Competitors Fare Against AMAT
Lam Research (LRCX - Free Report) secured multiple critical etch wins at a major DRAM manufacturer with its new Akara etch system, which supports 3D DRAM architectures. This was supported by LRCX’s customer investments in DDR5, LPDDR5 and high-bandwidth memory. Additionally, Lam Research’s Aether dry-resist technology was recently selected as the production tool of record for a leading DRAM customer, securing a foothold in this high-growth segment.
ASML Holding (ASML - Free Report) is experiencing strong demand from DRAM and logic customers, which are ramping leading-edge nodes using ASML’s NXE:3800E EUV systems. Additionally, ASML noted that multiple DRAM customers are adopting EUV lithography, which helps in shortening cycle time and lowering costs.
AMAT’s Price Performance, Valuation and Estimates
Shares of Applied Materials have gained 34.9% year to date compared with the Electronics - Semiconductors industry’s growth of 41.3%.
Image Source: Zacks Investment Research
From a valuation standpoint, Applied Materials trades at a forward price-to-sales ratio of 6.03X, lower than the industry’s average of 9.55X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Applied Materials’ fiscal 2025 earnings implies year-over-year growth of 8.21%. The estimate for fiscal 2025 has been revised dpwnward in the past 30 days.
Image Source: Zacks Investment Research
Applied Materials currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here