AMAT Scales Up Logic, DRAM & Advanced Packaging: What's Ahead?

Applied Materials AMAT expects its leading-edge foundry, logic, DRAM and high-bandwidth memory (HBM) to be the fastest-growing wafer fabrication equipment businesses in 2026. In Logic, AMAT’s revenues are driven by the shift from FinFET to Gate-All-Around (GAA) transistors and backside power delivery.

The company specializes in GAA transistors at 2nm and below, 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.

AMAT’s DRAM offerings are gaining traction as customers are aggressively investing in 6F² nodes supported by rising demand for high bandwidth memory DRAM, driven by AI workloads. On its first-quarter 2026 earnings call, AMAT highlighted its record growth in both Logic and DRAM segments, driven by major semiconductor transitions.

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. AMAT’s advanced packaging, particularly 3D chiplet stacking, is another structural tailwind as AI chips become more heterogeneous. AMAT’s new product launches and growth in cold field emission e-beam technology further strengthen its competitive position.

How Competitors Fare Against AMAT

Lam Research LRCX secured multiple critical etch 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. 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 134.4% in the past year compared with the Zacks Electronics - Semiconductors industry’s growth of 53.9%.

AMAT 12-Month Performance Chart

From a valuation standpoint, Applied Materials trades at a forward price-to-sales ratio of 9.55, higher than the industry’s average of 8.46X.

AMAT Forward 12-Month (P/S) Valuation Chart

The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 earnings implies year-over-year growth of 16.5%. The estimate for fiscal 2026 has been revised upward in the past seven days.

Applied Materials currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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

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