AMAT vs. AMKR: Which AI-Driven Semiconductor Stock is a Safer Bet?

Applied Materials AMAT and Amkor Technology AMKR are two key players in the AI infrastructure value chain serving widely different but crucial roles. While AMAT is a semiconductor equipment manufacturing company, AMKR packages and tests finished chips.

Both AMAT and AMKR have become crucial in the AI infrastructure market, bringing investors’ attention to their business models, risk profiles and long-term outlook. Let’s break down how each company is performing and which one looks like the better investment right now.

The Case for AMAT Stock

Applied Materials is a major manufacturer of semiconductor fabrication equipment, covering deposition, etching and inspection, serving the most crucial stages of chip manufacturing. AMAT expects its leading-edge foundry, logic, DRAM and high-bandwidth memory (HBM) to be the fastest-growing wafer fabrication equipment businesses in 2026.

AMAT specializes in Gate-All-Around transistors at 2nm and below, Backside power delivery, Advanced wiring and interconnect, HBM stacking and hybrid bonding and 3D device metrology, which are indispensable for manufacturing next-generation semiconductor chips. Recent launches like Xtera epi, Kinex hybrid bonding, PROVision 10 eBeam will add to AMAT’s growth story throughout 2026 and beyond.

Applied Materials’ HBM chips are increasing in complexity and size, with three to four times more wafer starts per bit than standard DRAM, making it highly equipment-intensive. This is good for AMAT as the market for HBM expands. 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 with its first integrated die-to-wafer hybrid bonder, Kinex. Although AMAT has a lower market share in the NAND space, it is gaining prominence. AMAT’s flash memory or NAND sales nearly doubled to $1.41 billion in fiscal 2025 from the year-ago figure of $747.4 million.

These factors are likely to push AMAT in the long term. The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 and 2027 revenues suggests growth of 9% and 18%, respectively. The Zacks Consensus Estimate for AMAT’s fiscal 2026 and 2027 earnings suggests growth of 16% and 24.5%, respectively. The estimates for fiscal 2026 and 2027 have been revised upward in the past seven days.

The Case for AMKR Stock

Amkor Technology is gaining from powerful secular tailwinds, particularly in AI-driven advanced packaging, while still facing meaningful near-term risks. The most significant growth driver is the accelerating demand for advanced packaging tied to artificial intelligence and high-performance computing.

Amkor Technology expects record advanced and computing revenues in 2026, with the company's 2.5D and high-density fan-out platforms to nearly triple in 2026, supported by new data center CPU programs and strong AI PC momentum. Computing revenues are projected to grow more than 20% this year, making it the primary engine of expansion.

Automotive is another bright spot, with strong growth in advanced driver-assistance systems, infotainment, and in-vehicle computing. Even though global auto unit volumes are expected to remain roughly flat, semiconductor content per vehicle continues to rise, providing a structural uplift.

The traditional PC market is expected to be soft, partially offsetting the other two businesses. Near-term margins are under pressure, with first-quarter gross margin guided lower due to seasonality, the absence of prior asset sale benefits, incremental costs, and potential currency headwinds.

The Zacks Consensus Estimate for AMKR’s 2026 and 2027 revenues suggests growth of 8.2% and 5.5%, respectively. The Zacks Consensus Estimate for AMKR’s fiscal 2026 and 2027 earnings suggests growth of 8% and 29.7%, respectively. The estimates for fiscal 2026 and 2027 have been revised upward in the past 30 days.

AMAT vs. AMKR: Price Performance & Valuation Check

AMAT shares have risen 122.7% in the past year, and AMKR has soared 118.4%.

One-Year Price Performance Chart

On the valuation front, Applied Materials trades at a forward 12-month price-to-earnings (P/S) ratio of 9.09, higher than the median of 5.54. AMKR trades at a forward P/S multiple of 1.62, higher than its median of 0.90.

Forward 12-Month (P/S) Valuation Chart

Conclusion: AMAT vs. AMKR

Both AMAT and AMKR play critical roles in the semiconductor supply chain, with the former being a leader in materials engineering-based layer modification tools and the latter in packaging and testing finished chips. AMKR is experiencing a softer PC market and margin pressure at present, raising investors’ concerns for the stock.

AMAT carries a Zacks Rank #2 (Buy) at present, while AMKR carries a Zacks Rank #3 (Hold). Hence, we suggest AMAT is a better choice among the two at present. 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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