On Tuesday, Stifel analysts maintained a positive stance on Applied Materials (NASDAQ:AMAT), reiterating a Buy rating and a price target of $195.00. According to InvestingPro data, the stock has shown significant momentum with a 9.78% return over the past week, while analyst targets range from $152 to $245. The firm anticipates that the company will meet or slightly surpass revenue and non-GAAP earnings estimates for both the second fiscal quarter ending in April and the outlook for the third fiscal quarter ending in July. This projection is based on an expectation of a flat sequential revenue trend and continued mid-to-upper single digit year-over-year growth.
Stifel’s outlook suggests that strength in certain sectors, such as leading-edge gate-all-around (GAA)/2nm technology and DRAM, will offset weaker spending in ICAPS and mature nodes. While there is some concern about potential declines in run rates later in the year, the firm expects Applied Materials’ sales in China to be more resilient than some might fear, despite ongoing trade and tariff uncertainties.
The analysis indicates that Applied Materials’ stock is currently attractive based on its forward P/E ratio relative to the S&P 500 and its peer KLA Corporation (KLAC). According to Stifel, the forward P/E ratio for Applied Materials has reached what they believe to be a bottom last month, at approximately 0.7 times that of the S&P 500 and KLA Corporation.
Applied Materials, which specializes in materials engineering solutions used to produce virtually every new chip and advanced display in the world, is set to report its F2Q earnings on Thursday. InvestingPro analysis reveals several positive indicators, including 7 consecutive years of dividend raises and strong cash flows. Subscribers can access 12+ additional ProTips and comprehensive financial metrics through the platform’s detailed research reports. The company’s performance is closely watched as a bellwether for the semiconductor industry, which has been facing a complex environment due to fluctuating demand, trade tensions, and technological advancements.
Investors and industry observers will be looking to the company’s earnings report and subsequent guidance for indications of the semiconductor sector’s health and Applied Materials’ positioning within the market. With a sustained focus on innovation and growth areas, the company aims to navigate the challenges and capitalize on the opportunities presented by the evolving global semiconductor landscape.
In other recent news, Applied Materials has announced a 15% increase in its quarterly cash dividend, marking an ongoing trend of dividend growth over the past eight years. The company also revealed a new $10 billion share repurchase program, supplementing an existing plan with $7.6 billion remaining. This decision underscores Applied Materials’ strong business outlook and commitment to returning value to its shareholders, as stated by CFO Brice Hill. Additionally, Applied Materials has acquired a 9% stake in BE Semiconductor Industries (AS:BESI) N.V. (Besi), enhancing their collaboration on hybrid bonding technology for semiconductor packaging. This strategic investment highlights the company’s focus on advancing energy-efficient chip solutions.
Furthermore, Applied Materials’ shareholders have approved executive compensation and elected directors during the recent Annual Meeting. The ratification of KPMG LLP as the independent auditor for fiscal year 2025 was also confirmed. Meanwhile, the company is facing potential additional costs due to new tariffs, with industry estimates suggesting losses of around $350 million annually for major U.S. chip equipment manufacturers, including Applied Materials. These developments reflect a mix of strategic growth and financial challenges for the company in the current market environment.
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