AMAT Stock Rises 42.3% in 6 Months: Should You Buy, Sell or Hold?

Applied Materials AMAT stock has gained 42.2% in the past six months, outperforming the Zacks Electronics - Semiconductors industry’s growth of 39.4%.

AMAT 6-Month Performance Chart

This surge in the stock price has led AMAT’s shares to trade above the 200-day and 50-day moving averages, indicating a bullish trend.

This surge in share price and this upward trend raise the question: Should investors buy, hold or sell the stock right now?

AMAT Benefits From Traction in AI-Based Products

As the global business scene moves toward AI-integration, the demand for AMAT’s high-performance semiconductor products is rising. AMAT has also introduced three new products, like Kinex Bonding System, Centura Xtera Epi System and PROVision 10 eBeam Metrology System, to capitalize on this space.

AMAT also expects its leading-edge foundry, logic, dynamic random access memory and high bandwidth memory to be the fastest-growing wafer fabrication equipment businesses in 2026, driven by massive AI infrastructure expansion. AMAT’s DRAM revenues from leading-edge customers grew more than 50% in 2025.

AMAT’s advanced packaging business, which is currently valued at $1.5 billion, is still on track to double to $3B over the next few years, driven by HBM demand and next-gen packaging architectures. AMAT restructured its pricing program and it is expected to contribute most of the 120-bps gross margin expansion in the coming fiscal year.

This cost restructuring will further provide AMAT with enough headroom to ramp up its R&D investments. AMAT is setting up the Equipment and Process Innovation and Commercialization center for research, which is expected to be operational by 2026. The company is also collaborating with organizations like CEA-Leti and increasing its overall R&D expenses.

Macroeconomic and Competitive Pressures Weigh on AMAT

A major headwind for Applied Materials is increasing U.S.-China tensions and export restrictions on semiconductor manufacturing equipment. China remains a crucial market for Applied Materials, accounting for a significant portion of total revenues. However, U.S. government restrictions on selling advanced semiconductor equipment to Chinese manufacturers are hurting Applied Materials’ sales and growth outlook.

Moreover, the broader semiconductor market is recovering, but memory markets, including DRAM and NAND, remain weak. The company expects only a gradual recovery in memory-related semiconductor demand in 2025, which could weigh on Applied Materials’ revenue growth in the near term. Furthermore, the competition from players like KLA Corp. KLAC, Lam Research LRCX and ASML Holding ASML in the semiconductor supply chain market is also a concern for AMAT.

Lam Research’s memory segment, accounting for both Dynamic Random Access Memory and Non-Volatile Memory divisions, is gaining traction on the back of AI. Lam Research’s memory and Non-Volatile Memory division’s sales are gaining traction. The rising demand for AI chips is also ramping up the demand for advanced process control and process-enabling solutions provided by KLA Corp.

KLAC’s advanced packaging solutions are also experiencing robust traction on the back of AI and high-performance computing. ASML Holding’s DRAM and logic customers are driving the demand for its products. These customers are ramping up 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.

These factors have contributed to analysts lowering the earnings estimates for fiscal 2026. The Zacks Consensus Estimate for fiscal 2026 earnings has been revised downward by a penny in the past seven days.

Conclusion: Hold AMAT for Now

AMAT has bright long-term prospects, thanks to its advanced wafer fabrication equipment portfolio. Tailwinds like DRAM and NAND revenue growth and AMAT’s AI strategy make us suggest that investors retain this Zacks Rank #3 (Hold) stock.

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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