Will AMAT's New AI-Chip Manufacturing Systems Bring Traction?

Applied Materials AMAT is benefiting from rising demand for AI infrastructure as the global data center, cloud and technology space moves toward AI integration. These factors are increasing the demand for fabrication, patterning and advanced packaging systems, creating opportunities for AMAT.

To capitalize on this trend, AMAT has introduced three new semiconductor manufacturing systems designed to power the next generation of AI chips. These systems include Kinex Bonding System, Centura Xtera Epi System and PROVision 10 eBeam Metrology System.

Kinex Bonding System is the industry’s first integrated die-to-wafer hybrid bonder, which streamlines hybrid bonding for multi-die packages, improving accuracy, consistency, and throughput while reducing power use and cost.

Centura Xtera Epi System is a new epitaxy tool for producing void-free Gate-All-Around (GAA) transistors, focused on cutting gas use by 50% and boosting transistor performance and reliability through improved uniformity. PROVision 10 eBeam Metrology offers 50% higher image resolution and 10× faster imaging.

Together, these innovations strengthen Applied Materials’ role as a key enabler of AI-era semiconductor scaling, addressing major device inflections in logic, memory, and packaging for 2nm nodes. AMAT’s Sym3 Magnum etch system and Cold Field Emission eBeam technology are already popular among chip developers.

How Competitors Fare Against AMAT

Lam Research LRCX secured multiple critical tech 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 recently selected as the production tool of record for a leading DRAM customer, securing a foothold in this high-growth segment.

ASML Holding ASML 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.

AMAT’s Price Performance, Valuation and Estimates

Shares of Applied Materials have gained 38.3% year to date compared with the Electronics - Semiconductors industry’s growth of 39.8%.

From a valuation standpoint, Applied Materials trades at a forward price-to-sales ratio of 6.18X, lower than the industry’s average of 9.41X.

The Zacks Consensus Estimate for Applied Materials’ fiscal 2025 earnings implies year-over-year growth of 8.21%. The estimate for fiscal 2025 has been revised downward in the past seven days.

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.

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This article originally published on Zacks Investment Research (zacks.com).

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