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AMAT Deepens its AI-Centric Product Expertise: Will it Deliver Growth?
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Key Takeaways
AMAT benefits from strong demand for wafer equipment tied to AI-driven advanced chips.
AMAT partners with SK hynix and Micron to advance DRAM and HBM.
AMAT sees growth in DRAM and logic, targeting $3B from expanding HBM opportunities.
Applied Materials (AMAT - Free Report) is gaining from the high demand for its wafer equipment manufacturing products, driven by the rising use of advanced chips by AI data centers and hyperscalers. AMAT provides solutions across multiple fabrication steps, like deposition, materials engineering, etch, metrology and packaging, making it crucial in the chip space.
Applied Materials and SK hynix have formed a long-term R&D partnership to accelerate next-generation memory innovation, particularly in DRAM and high-bandwidth memory (HBM) for AI applications. The collaboration will focus on new materials, advanced process technologies and 3D packaging to enhance performance and efficiency.
Applied Materials and Micron Technology have formed a strategic partnership to advance next-generation AI memory solutions in the United States. The collaboration will focus on developing advanced DRAM, HBM and NAND technologies, combining Applied Materials’ process expertise with Micron’s manufacturing capabilities.
AMAT’s DRAM offerings are gaining traction as customers are aggressively investing in 6F² nodes supported by rising demand for high bandwidth memory DRAM, driven by AI workloads. On its first-quarter 2026 earnings call, AMAT highlighted its record growth in both Logic and DRAM segments, driven by major semiconductor transitions.
AMAT expects its leading-edge foundry, logic, DRAM and HBM to be the fastest-growing wafer fabrication equipment businesses in 2026. AMAT also gains from the increasing complexity and size of HBM chips, making it highly equipment-intensive. This is good for AMAT as the market for HBM expands. The company is determined to reach $3 billion in the next few years.
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 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. However, AMAT offers a broad range of WFE products that do not compete directly with ASML and Lam Research, making it a stock worth holding.
AMAT’s Price Performance, Valuation and Estimates
Shares of Applied Materials have surged 48.4% in the past six months against the Zacks Electronics - Semiconductors industry’s decline of 2.4%.
AMAT Six-Month Performance Chart
Image Source: Zacks Investment Research
From a valuation standpoint, Applied Materials trades at a forward price-to-sales ratio of 7.64X, higher than the industry’s average of 6.71X.
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 17.9% and 26.4%, respectively. The estimates for fiscal 2026 and 2027 have been revised upward over the past 60 and 30 days, respectively.
View the Zacks #1 Rank List
Image: Bigstock
AMAT Deepens its AI-Centric Product Expertise: Will it Deliver Growth?
Key Takeaways
Applied Materials (AMAT - Free Report) is gaining from the high demand for its wafer equipment manufacturing products, driven by the rising use of advanced chips by AI data centers and hyperscalers. AMAT provides solutions across multiple fabrication steps, like deposition, materials engineering, etch, metrology and packaging, making it crucial in the chip space.
Applied Materials and SK hynix have formed a long-term R&D partnership to accelerate next-generation memory innovation, particularly in DRAM and high-bandwidth memory (HBM) for AI applications. The collaboration will focus on new materials, advanced process technologies and 3D packaging to enhance performance and efficiency.
Applied Materials and Micron Technology have formed a strategic partnership to advance next-generation AI memory solutions in the United States. The collaboration will focus on developing advanced DRAM, HBM and NAND technologies, combining Applied Materials’ process expertise with Micron’s manufacturing capabilities.
AMAT’s DRAM offerings are gaining traction as customers are aggressively investing in 6F² nodes supported by rising demand for high bandwidth memory DRAM, driven by AI workloads. On its first-quarter 2026 earnings call, AMAT highlighted its record growth in both Logic and DRAM segments, driven by major semiconductor transitions.
AMAT expects its leading-edge foundry, logic, DRAM and HBM to be the fastest-growing wafer fabrication equipment businesses in 2026. AMAT also gains from the increasing complexity and size of HBM chips, making it highly equipment-intensive. This is good for AMAT as the market for HBM expands. The company is determined to reach $3 billion in the next few years.
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 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. However, AMAT offers a broad range of WFE products that do not compete directly with ASML and Lam Research, making it a stock worth holding.
AMAT’s Price Performance, Valuation and Estimates
Shares of Applied Materials have surged 48.4% in the past six months against the Zacks Electronics - Semiconductors industry’s decline of 2.4%.
AMAT Six-Month Performance Chart
Image Source: Zacks Investment Research
From a valuation standpoint, Applied Materials trades at a forward price-to-sales ratio of 7.64X, higher than the industry’s average of 6.71X.
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 17.9% and 26.4%, respectively. The estimates for fiscal 2026 and 2027 have been revised upward over the past 60 and 30 days, respectively.
Image Source: Zacks Investment Research
Applied Materials currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.