We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will DRAM Strength Drive Applied Materials' Next Growth Phase?
Read MoreHide Full Article
Key Takeaways
AMAT saw DRAM revenues from leading-edge customers rise over 50% across the past four fiscal quarters.
AI servers are boosting demand for advanced DRAM and HBM, raising memory content per data center system.
Applied Materials expects DRAM and HBM to be among the fastest-growing equipment spend areas in 2026.
Applied Materials (AMAT - Free Report) is seeing improving conditions in the Dynamic Random Access Memory (DRAM) market, which could support its next phase of growth. While overall spending on semiconductor equipment was mixed in fiscal 2025, DRAM remained one of the steadier areas for the company.
During fiscal 2025, Applied Materials improved its position in the DRAM market, especially with leading-edge customers. In the fourth quarter of fiscal 2025, management stated that revenues from these DRAM customers grew by more than 50% over the past four fiscal quarters. This bodes well for the company's prospects because leading-edge customers are usually the first to increase spending when new memory technologies move toward production.
Additionally, DRAM demand is becoming more closely tied to artificial intelligence (AI). AI servers need more memory and faster memory, including high-bandwidth memory (HBM). As AI workloads increase in data centers, memory content per server is going up. This is pushing memory makers to invest more in advanced DRAM manufacturing, which supports demand for Applied Materials’ tools.
Looking ahead, management expects DRAM and HBM to be among the fastest-growing parts of semiconductor equipment spending in 2026. This shift in spending works in Applied Materials’ favor. The company has strong process technology in DRAM and provides tools that help customers improve yields, handle more complex designs, and reduce manufacturing costs.
Overall, the above-mentioned factors demonstrate that if DRAM spending keeps improving and AI-related memory demand continues to grow, DRAM could play a key role in supporting Applied Materials’ growth in the coming years.
How Competitors Fare Against AMAT
Companies like Lam Research (LRCX - Free Report) and ASML Holdings (ASML - Free Report) are leading players in the DRAM, Logic and etching space.
Lam Research’s DRAM and Non-Volatile Memory products are gaining traction on the back of AI. Lam Research is also winning multiple clients as DRAM manufacturers are using its latest conductor etch tool, Akara.
ASML Holdings’ top line is driven by its DRAM and logic customers, who are ramping leading-edge nodes using ASML’s NXE:3800E EUV systems. ASML also benefits from rising AI infrastructure spending, which is boosting demand for advanced logic and DRAM.
AMAT’s Price Performance, Valuation and Estimates
Shares of Applied Materials have gained 44.3% in the past six months compared with the Electronics - Semiconductors industry’s growth of 25.8%.
AMAT 6-Month Performance Chart
Image Source: Zacks Investment Research
From a valuation standpoint, Applied Materials trades at a forward price-to-sales ratio of 6.99X, higher than the industry’s average of 6.42X.
AMAT Forward 12 Month (P/S) Valuation Chart
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 and 2027 earnings implies year-over-year growth of 1.4% and 17.9%, respectively. The estimates for fiscal 2026 and 2027 have been revised upward in the past seven days.
Image: Bigstock
Will DRAM Strength Drive Applied Materials' Next Growth Phase?
Key Takeaways
Applied Materials (AMAT - Free Report) is seeing improving conditions in the Dynamic Random Access Memory (DRAM) market, which could support its next phase of growth. While overall spending on semiconductor equipment was mixed in fiscal 2025, DRAM remained one of the steadier areas for the company.
During fiscal 2025, Applied Materials improved its position in the DRAM market, especially with leading-edge customers. In the fourth quarter of fiscal 2025, management stated that revenues from these DRAM customers grew by more than 50% over the past four fiscal quarters. This bodes well for the company's prospects because leading-edge customers are usually the first to increase spending when new memory technologies move toward production.
Additionally, DRAM demand is becoming more closely tied to artificial intelligence (AI). AI servers need more memory and faster memory, including high-bandwidth memory (HBM). As AI workloads increase in data centers, memory content per server is going up. This is pushing memory makers to invest more in advanced DRAM manufacturing, which supports demand for Applied Materials’ tools.
Looking ahead, management expects DRAM and HBM to be among the fastest-growing parts of semiconductor equipment spending in 2026. This shift in spending works in Applied Materials’ favor. The company has strong process technology in DRAM and provides tools that help customers improve yields, handle more complex designs, and reduce manufacturing costs.
Overall, the above-mentioned factors demonstrate that if DRAM spending keeps improving and AI-related memory demand continues to grow, DRAM could play a key role in supporting Applied Materials’ growth in the coming years.
How Competitors Fare Against AMAT
Companies like Lam Research (LRCX - Free Report) and ASML Holdings (ASML - Free Report) are leading players in the DRAM, Logic and etching space.
Lam Research’s DRAM and Non-Volatile Memory products are gaining traction on the back of AI. Lam Research is also winning multiple clients as DRAM manufacturers are using its latest conductor etch tool, Akara.
ASML Holdings’ top line is driven by its DRAM and logic customers, who are ramping leading-edge nodes using ASML’s NXE:3800E EUV systems. ASML also benefits from rising AI infrastructure spending, which is boosting demand for advanced logic and DRAM.
AMAT’s Price Performance, Valuation and Estimates
Shares of Applied Materials have gained 44.3% in the past six months compared with the Electronics - Semiconductors industry’s growth of 25.8%.
AMAT 6-Month Performance Chart
Image Source: Zacks Investment Research
From a valuation standpoint, Applied Materials trades at a forward price-to-sales ratio of 6.99X, higher than the industry’s average of 6.42X.
AMAT Forward 12 Month (P/S) Valuation Chart
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 and 2027 earnings implies year-over-year growth of 1.4% and 17.9%, respectively. The estimates for fiscal 2026 and 2027 have been revised upward in the past seven days.
Image Source: Zacks Investment Research
Applied Materials currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.