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AMAT Rises 56% in a Year: Should You Buy, Sell or Hold the Stock?
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Key Takeaways
Applied Materials sees strong AI-driven demand across logic, DRAM and advanced packaging.
AMAT expects margin expansion from its restructured pricing program and rising high-margin tools.
Applied Materials faces export curbs, memory softness and stiff competition weighing on growth.
Applied Materials (AMAT - Free Report) shares have gained 56.1% in the past year, outperforming the Zacks Computer and Technology sector’s growth of 24.8%. This rise in share price raises a question: Should investors buy, hold or sell the stock? Let’s discuss the fundamentals in detail.
AMAT One-Year Performance Chart
Image Source: Zacks Investment Research
AMAT Experiences Traction Across Logic, DRAM & Packaging
Applied Materials is benefiting from rising demand for AI infrastructure as the global data center, cloud and technology space moves toward AI integration, raising the demand for fabrication, patterning and advanced packaging systems. To capitalize on this trend, AMAT has introduced three new semiconductor manufacturing systems, including Kinex Bonding System, Centura Xtera Epi System and PROVision 10 eBeam Metrology System.
In Logic, AMAT’s revenues are driven by the shift from FinFET to Gate-All-Around transistors and backside power delivery. AMAT is also experiencing a strong wave of momentum in the DRAM segment. AMAT’s profits are growing due to traction in high-margin logic foundry solutions, Sym3 Magnum etch system, Cold Field Emission eBeam technology used in the manufacturing of AI and high performance computing chips.
AMAT expects its leading-edge foundry, logic, dynamic random access memory and high bandwidth memory to be the fastest-growing wafer fabrication equipment businesses in 2026. AMAT’s advanced packaging business, which is currently valued at $1.5 billion, is still on track to double to $3 billion over the next few years, driven by HBM demand and next-generation packaging architectures.
AMAT restructured its pricing program, and it is expected to contribute most of the 120-bps gross margin expansion in the coming fiscal year. This cost restructuring will further provide AMAT with enough headroom to ramp up its R&D investments. AMAT is setting up the Equipment and Process Innovation and Commercialization center for research, which is expected to be operational by 2026. These developments in AMAT’s growth story have instilled confidence among investors, which has translated into a surge in stock price.
AMAT’s 50-Day and 200-Day SMA Show Bullish Trend
This surge in the stock price has led AMAT’s shares to trade above the 200-day and 50-day moving averages, indicating a bullish trend.
Image Source: Zacks Investment Research
Macroeconomic and Competitive Pressures Weigh on AMAT
A major headwind for Applied Materials is increasing U.S.-China tensions and export restrictions on semiconductor manufacturing equipment. China remains a crucial market for Applied Materials, accounting for a significant portion of total revenues. However, U.S. government restrictions on selling advanced semiconductor equipment to Chinese manufacturers are hurting Applied Materials’ sales and growth outlook.
Moreover, the broader semiconductor market is recovering, but memory markets, including DRAM and NAND, remain weak. The company expects only a gradual recovery in memory-related semiconductor demand in 2025, which could weigh on Applied Materials’ revenue growth in the near term. Furthermore, the competition from players like KLA Corp. (KLAC - Free Report) , Lam Research (LRCX - Free Report) and ASML Holding (ASML - Free Report) in the semiconductor supply chain market is also a concern for AMAT.
Lam Research’s memory segment, accounting for both Dynamic Random Access Memory and Non-Volatile Memory divisions, is gaining traction on the back of AI. Lam Research’s memory and Non-Volatile Memory division’s sales are gaining traction. The rising demand for AI chips is also ramping up the demand for advanced process control and process-enabling solutions provided by KLA Corp.
KLAC’s advanced packaging solutions are also experiencing robust traction on the back of AI and high-performance computing. ASML Holding’s DRAM and logic customers are driving the demand for its products. These customers are ramping up 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 Stock is Overvalued at Present
Applied Materials shares are trading at a forward price-to-sales ratio of 7.28X, higher than the industry’s average of 6.79X.
AMAT Forward 12 Month (P/S) Valuation Chart
Image Source: Zacks Investment Research
Conclusion: Hold AMAT Stock Now
Applied Materials enjoys powerful AI-driven momentum across logic, DRAM and advanced packaging, supported by expanding margins and rising investor confidence. Yet export restrictions, competitive pressure and a stretched valuation limit near-term upside. Considering these factors, we suggest that investors should retain this Zacks Rank #3 (Hold) stock at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
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AMAT Rises 56% in a Year: Should You Buy, Sell or Hold the Stock?
Key Takeaways
Applied Materials (AMAT - Free Report) shares have gained 56.1% in the past year, outperforming the Zacks Computer and Technology sector’s growth of 24.8%. This rise in share price raises a question: Should investors buy, hold or sell the stock? Let’s discuss the fundamentals in detail.
AMAT One-Year Performance Chart
Image Source: Zacks Investment Research
AMAT Experiences Traction Across Logic, DRAM & Packaging
Applied Materials is benefiting from rising demand for AI infrastructure as the global data center, cloud and technology space moves toward AI integration, raising the demand for fabrication, patterning and advanced packaging systems. To capitalize on this trend, AMAT has introduced three new semiconductor manufacturing systems, including Kinex Bonding System, Centura Xtera Epi System and PROVision 10 eBeam Metrology System.
In Logic, AMAT’s revenues are driven by the shift from FinFET to Gate-All-Around transistors and backside power delivery. AMAT is also experiencing a strong wave of momentum in the DRAM segment. AMAT’s profits are growing due to traction in high-margin logic foundry solutions, Sym3 Magnum etch system, Cold Field Emission eBeam technology used in the manufacturing of AI and high performance computing chips.
AMAT expects its leading-edge foundry, logic, dynamic random access memory and high bandwidth memory to be the fastest-growing wafer fabrication equipment businesses in 2026. AMAT’s advanced packaging business, which is currently valued at $1.5 billion, is still on track to double to $3 billion over the next few years, driven by HBM demand and next-generation packaging architectures.
AMAT restructured its pricing program, and it is expected to contribute most of the 120-bps gross margin expansion in the coming fiscal year. This cost restructuring will further provide AMAT with enough headroom to ramp up its R&D investments. AMAT is setting up the Equipment and Process Innovation and Commercialization center for research, which is expected to be operational by 2026. These developments in AMAT’s growth story have instilled confidence among investors, which has translated into a surge in stock price.
AMAT’s 50-Day and 200-Day SMA Show Bullish Trend
This surge in the stock price has led AMAT’s shares to trade above the 200-day and 50-day moving averages, indicating a bullish trend.
Image Source: Zacks Investment Research
Macroeconomic and Competitive Pressures Weigh on AMAT
A major headwind for Applied Materials is increasing U.S.-China tensions and export restrictions on semiconductor manufacturing equipment. China remains a crucial market for Applied Materials, accounting for a significant portion of total revenues. However, U.S. government restrictions on selling advanced semiconductor equipment to Chinese manufacturers are hurting Applied Materials’ sales and growth outlook.
Moreover, the broader semiconductor market is recovering, but memory markets, including DRAM and NAND, remain weak. The company expects only a gradual recovery in memory-related semiconductor demand in 2025, which could weigh on Applied Materials’ revenue growth in the near term. Furthermore, the competition from players like KLA Corp. (KLAC - Free Report) , Lam Research (LRCX - Free Report) and ASML Holding (ASML - Free Report) in the semiconductor supply chain market is also a concern for AMAT.
Lam Research’s memory segment, accounting for both Dynamic Random Access Memory and Non-Volatile Memory divisions, is gaining traction on the back of AI. Lam Research’s memory and Non-Volatile Memory division’s sales are gaining traction. The rising demand for AI chips is also ramping up the demand for advanced process control and process-enabling solutions provided by KLA Corp.
KLAC’s advanced packaging solutions are also experiencing robust traction on the back of AI and high-performance computing. ASML Holding’s DRAM and logic customers are driving the demand for its products. These customers are ramping up 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 Stock is Overvalued at Present
Applied Materials shares are trading at a forward price-to-sales ratio of 7.28X, higher than the industry’s average of 6.79X.
AMAT Forward 12 Month (P/S) Valuation Chart
Image Source: Zacks Investment Research
Conclusion: Hold AMAT Stock Now
Applied Materials enjoys powerful AI-driven momentum across logic, DRAM and advanced packaging, supported by expanding margins and rising investor confidence. Yet export restrictions, competitive pressure and a stretched valuation limit near-term upside. Considering these factors, we suggest that investors should retain this Zacks Rank #3 (Hold) stock at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.