Applied Materials FY25 HBM Revenues Hit $1.5B: A New Growth Driver?

Applied Materials’ AMAT high bandwidth memory (HBM) business revenues hit $1.5 billion in fiscal 2025. The company is determined to reach $3 billion in the next few years. AMAT expects future generations of HBM to adopt hybrid bonding, and in the hybrid bonding space, AMAT is one of the leading innovators.

Applied Materials launched the industry’s first integrated die-to-wafer hybrid bonder, Kinex, which combines precise die placement, clean processing, and in-line metrology in a single system. The Kinex system supports higher-performance, lower-power logic and memory chips by enabling advanced hybrid bonding for complex chip packages.

By integrating all key bonding steps, Kinex improves bonding accuracy, consistency and throughput, supports smaller interconnect pitches, and simplifies manufacturing for advanced multi-die designs, with adoption already underway at leading logic, memory, and OSAT customers. This system is going to be a crucial step to AMAT’s hybrid bonding HBM technology.

Although AMAT’s HBM revenues in 2025 were weaker than in the prior year, making overall growth look softer. Even so, the business was roughly flat year over year, and the company projects a positive long-term outlook. AMAT, on its fourth-quarter fiscal 2025 earnings call, mentioned that it is a leader in HBM, which puts it in a strong position as demand ramps up.

Since customers are increasingly focused on larger, more advanced packages to connect GPUs, CPUs, and other components more efficiently, improving performance and power, AMAT’s broad product portfolio and deep engagement with leading R&D teams may help its HBM business double over the next few years.

How Competitors Fare Against AMAT

While AMAT dominates non-lithography wafer fabrication equipment manufacturing, ASML Holding ASML leads the lithography space. ASML Holding and Lam Research LRCX both play crucial roles in the HBM space. Lam Research is actively investing in increasing its HBM capabilities within DRAM.

In its first-quarter fiscal 2026 earnings, Lam Research highlighted that HBM high-volume manufacturing is already ramping up for at least one major memory customer using its Aether dry EUV resist technology. On the other hand, ASML sees HBM as a structural EUV demand driver within advanced DRAM, reinforced by High-NA EUV adoption in the future.

AMAT’s Price Performance, Valuation and Estimates

Shares of Applied Materials have surged 55% in the past six months compared with the Zacks Electronics - Semiconductors industry’s appreciation of 23.5%.

AMAT 6-Month Performance Chart

From a valuation standpoint, Applied Materials trades at a forward price-to-sales ratio of 8.08X, lower than the industry’s average of 8.40X.

AMAT Forward 12 Month (P/S) Valuation Chart

The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 and 2027 earnings implies year-over-year growth of 1.59% and 19.47%, respectively. The estimates for fiscal 2026 and 2027 have been revised upward 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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