Applied Materials Stock Analysis

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Applied Materials Stock Analysis

Should You Buy Applied Materials (Amat) Stock?

The rise in AI applications and tools has also led to higher demand for AI chips. Amidst all of this, companies like Nvidia have earned a lot of money, and this is also reflected in the company's stock price.

But there's one more company that also happens to be an integral player in the semiconductor industry. Yes, we are talking about Applied Materials (AMAT), which is a semiconductor equipment maker.

Applied Materials Stock Is Up By 270%

Applied Materials (AMAT) hasn't gotten the limelight like Nvidia, but its stock gained an upside of 270% in the last 5 years. Meanwhile, the S&P 500 has only doubled during that period.

So in a sense, we can say that Applied Materials (AMAT) has managed to outperform the market. But what does Applied Materials (AMAT) do?

They make equipment that is used in the manufacturing of semiconductors. During FY2024, around 73% of Applied Materials' (AMAT) revenue was from semiconductor systems. Meanwhile, around 23% of the company's revenue was from display & other similar services.

But the Applied Materials stock is trading near its ATH, which might make it a little less attractive than other stocks that are trading at a reasonable valuation.

Also, the growth rate of Applied Materials is slower than that of ASML, which is an industry peer. So, that's also something to consider when we look at the Applied Materials stock.

For FY2025, analysts believe that Applied Materials' EPS and revenue will grow by 8% and 4%, respectively. For FY2026, the EPS will increase by 1% and revenue will rise by 3%. Last but not least, the dividend yield of Applied Materials is 0.8%, which is not that impressive.

So, if you are looking for a good stock to benefit from the AI chipmaking boom, then Applied Materials stock can be a good option. But, you must also consider that there are other big names, such as ASML, which are a much better option.

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