Amtech Stock Plummets 31% YTD: Should Investors Hold or Fold?

Amtech Systems ASYS shares have plunged 31.2% year to date, underperforming the broader Zacks Computer and Technology sector’s 14.4% decline and the Zacks Semiconductor - General industry’s 17.3% drop.

The ASYS stock has also underperformed its peers, including NVIDIA NVDA, STMicroelectronics STM and Texas Instruments TXN.

In the same timeframe, shares of NVIDIA, STMicroelectronics and Texas Instruments have declined 17.4%, 18.1% and 21.3%, respectively.

Amtech's share price weakness reflects investor concerns over its lower revised outlook for the second quarter of fiscal 2025. ASYS is facing headwinds in key market segments, particularly in the industrial equipment and automotive sectors, wherein the demand for equipment and consumables remains soft.

Amtech Systems, Inc. Price and Consensus

 

Amtech Systems, Inc. price-consensus-chart | Amtech Systems, Inc. Quote

ASYS Slashes Q2 View on Industry Slowdown

Last week, Amtech released a concerning update to its fiscal second-quarter guidance, revealing significant operational and financial setbacks. ASYS slashed its revenue forecast from $21-$23 million to $15-$16 million. This downward revision is attributed to a customer dispute in the Thermal Processing Solutions segment, which led to a $4.9-million order shipment delay, and continued weakening demand in the mature-node semiconductor sector, including silicon carbide applications.

Consequently, ASYS anticipates a nominally negative adjusted EBITDA for the to-be-reported quarter, marking a reversal from its earlier projection of a nominally positive outcome.

Nevertheless, Amtech demonstrated resilience through restructuring and a focus on advanced packaging, which provided a tailwind to capital equipment demand and supported improved profitability and financial stability. Demand for ASYS reflow equipment in leading-edge applications, particularly in AI infrastructure, continues to strengthen.

Amtech’s Restructuring & Cost Efficiency to Boost Growth

ASYS has made substantial progress in restructuring its operations to improve cost efficiency and better align with evolving market demands. These efforts are already yielding tangible results, with more than $8 million in annualized cost savings realized to date and projections to reach $9 million by the end of the second quarter of fiscal 2025. A core element of this transformation is the adoption of a semi-fabless manufacturing model, which has effectively reduced fixed costs and improved operational leverage.

In response to inflationary pressures, Amtech has proactively implemented pricing adjustments over the past several quarters to improve its product margins. By the end of the second quarter, the company expects to have cleared the majority of its low-priced, lower-margin backlog, which should contribute positively to profitability. Amtech will continue to manage its pricing strategy with a focus on sustaining robust margins and ensuring long-term profitability in a dynamic market landscape.

Strong Demand in Advanced Packaging Aids ASYS’ Prospects

Amtech has observed a sharp acceleration in demand for advanced packaging, driven primarily by the rapid expansion of AI infrastructure. The long-term outlook for this segment remains strong as growing momentum in AI and high-performance computing continues to fuel capital equipment investments. Amtech’s customer base, mainly OSAT, is increasingly focusing on packaging chipsets for AI data centers, whereas the widespread deployment of AI-enabled hardware at the edge is driving the demand for advanced packaging solutions.

ASYS has identified advanced packaging as a key growth driver, particularly within the growing AI infrastructure market. In the first quarter of fiscal 2025, the company saw increased demand for its reflow equipment in advanced packaging applications related to AI. This growing interest is expected to act as a powerful catalyst.

Conclusion

While ASYS faces short-term pressures from soft industrial and automotive demand, its strong foothold in the fast-growing AI-driven advanced packaging space offers a meaningful upside. Operational improvements and a focus on higher-margin opportunities strengthen its outlook.
 
Amtech currently has 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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