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Semiconductor Systems to Aid Applied Materials (AMAT) Q1 Earnings

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Applied Materials, Inc. (AMAT - Free Report) fiscal first-quarter 2020 results, which are scheduled to be released on Feb 12, are likely to reflect solid momentum across Semiconductor Systems segment.

The underlined segment offers equipment for front-end operations in the semiconductor manufacturing process.

We note that the company has been leading the global semiconductor industry for over 20 years. Moreover, the company is a global leader in semiconductor equipment sales.

Moreover, the segment has become an integral division of the company as it generates significant part of net sales. Notably, Semiconductor Systems sales came in at $2.3 billion, accounting for 61% of net sales in the last reported quarter. The figure also surged 2.5% year over year, despite softness in the semiconductor space.

We believe rising demand for semiconductor equipment is likely to have continued driving the segment’s fiscal first-quarter sales.

For first-quarter fiscal 2020, the company projects sales in this segment at $2.775 billion, suggesting growth of 22.4% from the prior-year quarter. The Zacks Consensus Estimate for semiconductor sales is pegged at $2.774 billion.

Click here to know how the company’s overall fiscal first-quarter performance is likely to be.


Factors at Play

Semiconductor Systems segment is expected to have benefited from AI Design Forum, which is likely to have aided the company's design wins during the to-be-reported quarter.

Moreover, the company’s new application wins for its high growth semi products in dielectric deposition, etch and inspection are expected to have contributed to the fiscal first-quarter performance.

Additionally, the company is expected to have gained traction in the IoT, communications, automotive, power and image sensor markets, courtesy of its strong investments in capacity and new advanced technologies, and growing demand for specialty nodes.

Further, increasing customer spending in foundry and logic is likely to have acted as a tailwind. Moreover, this is likely to have aided the company’s momentum across optical wafer inspection space in the to-be-reported quarter.

Additionally, the company’s wining critical applications in NAND are expected to have benefited its position in etch in the quarter under review.

Further, solid momentum across technologies such as — Epitaxy, Physical Vapor Deposition, Ion Implant, Rapid Thermal Processing, Etch, Metrology and Inspection and Chemical Mechanical Planarization among others, is likely to have aided this segment’s performance during the fiscal first quarter.

Zacks Rank & Other Stocks to Consider

Currently, Applied Materials sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the broader technology sector are Alteryx, Inc. (AYX - Free Report) , Itron, Inc. (ITRI - Free Report) and Benefitfocus, Inc. (BNFT - Free Report) . All the three stocks flaunt a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Alteryx, Itron and Benefitfocus is currently pegged at 39.85%, 25% and 25%, respectively.

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