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On Feb 20, Applied Materials, Inc. (AMAT - Free Report) was upgraded to a Zacks Rank #1 (Strong Buy).

The company reported robust first-quarter fiscal 2018 results, wherein both the top and the bottom line surpassed the Zacks Consensus Estimate. Notably, the company outperformed the Zacks Consensus Estimate for earnings in the trailing four quarters, with an average beat of 4.76%.

Non-GAAP earnings of $1.06 per share increased 14% sequentially and 59% year over year. The growth was primarily attributed to strong revenue growth, up 5.9% sequentially and 28.2% year over year, to $4.2 billion. Robust demand for the company’s products across all regions provided an impetus to the top line.

The impressive results are driving earnings estimates upward. The Zacks Consensus Estimate for 2018 earnings has increased almost 7% to $4.33 per share in the last seven days. Earnings estimate for 2019 has also increased 4.1% to $4.55 per share over the same time frame.

The stock has returned 56.0% over a year, outperforming the industry’s rally of 50.9%.

Strong Product Portfolio: Key Catalyst

Applied Materials’ well-differentiated product portfolio is the primary growth driver. Moreover, mobile OLEDs and large screen televisions are opening up new growth opportunities for the company. Further, the company’s efforts to expand the display business are likely to drive the top line.

Further, technological innovation and advancement is a solid growth driver. Strengthening 3D NAND, DRAM, 10nm logic processes and patterning are leading to significant market share gains. Also, increase in cloud computing application has led to growing demand for NAND in the market.

Additionally, the semiconductor companies are trying to improvise the process of wafer fabrication. This is boosting the demand for Applied Material’s fabrication equipment.

We also note the company remains well positioned in China. Growing investments from Chinese domestic manufacturers have been encouraging.

Other Stocks to Consider

Investors can also consider Lam Research Corporation (LRCX - Free Report) , ASML Holding (ASML - Free Report) and Advanced Energy Industries (AEIS - Free Report) from the broader technology sector. While Lam Research Corporation and ASML Holding sport a Zacks Rank #1, Advanced Energy Industries carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Lam Research Corporation, ASML Holding and Advanced Energy Industries are currently pegged at 14.85%, 18.65% and 9.0%, respectively.

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