Applied Materials, Inc. (NASDAQ: AMAT) engages in the provision of manufacturing equipment, services, and software to the semiconductor, display, and related industries. It operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. The Semiconductor Systems segment develops, manufactures, and sells various manufacturing equipment that is used to fabricate semiconductor chips or integrated circuits. This segment also offers various technologies, including epitaxy, ion implantation, oxidation/nitridation, rapid thermal processing, physical vapor deposition, chemical vapor deposition, chemical mechanical planarization, electrochemical deposition, atomic layer deposition, etching, and selective deposition and removal, as well as metrology and inspection tools. The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity comprising spares, upgrades, services, remanufactured earlier generation equipment, and factory automation software for semiconductor, display, and other products. The Display and Adjacent Markets segment offers products for manufacturing liquid crystal displays; organic light-emitting diodes; and other display technologies for TVs, monitors, laptops, personal computers, electronic tablets, smart phones, and other consumer-oriented devices. The company operates in the United States, China, Korea, Taiwan, Japan, Southeast Asia, and Europe. Applied Materials, Inc. was incorporated in 1967 and is headquartered in Santa Clara, California.
Applied Materials is the largest semiconductor equipment stock by revenue, with the most diversified portfolio across etch, deposition, metrology, ion implantation, and other types of machines serving leading-edge, trailing edge, and memory customers. In Applied’s recent earnings report, the benefits of that diversification were on prominent display. Of note, the memory market is practically in a recession, with virtually all leading memory producers pulling back on their spending this year — some by 50% or more. Even leading-edge foundry investment is supposed to be down this year, as the past two years of high spending have left overcapacity for most leading-edge chips, despite today’s AI boom.
Company Overview
- Market Cap: 94.07 billion
- PE Ratio: 14.92
- EPS: 7.46
- Dividend Yield: 0.93%
Given all these headwinds, one would think Applied’s results would be declining. Yet the company just reported 7% growth in the quarter ending Jan. 31. Applied also guided to a slight 5% decline in revenues next quarter. Applied’s management noted the company’s backlog actually increased for the ninth quarter in a row. Therefore, the benefits of diversification show that Applied Materials is the best stock to own for long term.