Taiwan Semiconductor recently received a $12 billion grant from the U.S., which will help the company build out its necessary factories to diversify the semiconductor supply chain. The supply chain was severely disrupted during COVID-19, causing shortages in every consumer electronic product.
Others are hopping on this bandwagon, with Intel Co. NASDAQ: INTC and even Samsung Electronics Co. OTCMKTS: SSNLF receiving a few billion themselves to start building manufacturing infrastructure in the U.S.
The keyword here is manufacturing, as in the manufacturing sector itself. Analysts at The Goldman Sachs Group Inc. expect to see a breakout in the industry throughout 2024, a thesis investors can find in the bank’s 2024 macro outlook report.
Because the Fed is looking to cut interest rates this year, leading to a weaker dollar, American goods could become more attractive in the eyes of foreign buyers. February’s ISM manufacturing PMI index posted a 6.4% bump in export orders; it looks like Goldman’s thesis is correct.
Bringing a fundamental reason to stay within manufacturing stocks and an even more significant global trend in artificial intelligence, it is time for investors to find out why Applied Materials is a top candidate on this list.
Applied Materials, Inc. (AMAT) Price Chart for Friday, September, 27, 2024
Don’t be Fooled by The Quarter
Flat revenue, that’s what the company’s press release says about the first quarter of 2024. Though an 11% boost in earnings per share (EPS) shows the business’s operations are becoming more efficient – and profitable – despite seeing no material increase in the top-line.
This is because of the easing supply chains in the semiconductor space, helping improve pricing power for companies like Taiwan Semiconductor Manufacturing and Samsung, which are top customers for Applied Materials.
If the world wants more advancements in AI. That’s good for Taiwan Semiconductor’s business, which is also suitable for Applied Materials. Moving past this obvious economic fact, here’s where investors can get some extra juice to squeeze.
Analysts at Cantor Fitzgerald saw it fit to slap a $260 price target on Applied Materials, calling for up to 21.5% upside from where the stock trades today. Following this trend, UBS analysts pushed for $235 a share, or roughly 10% above today’s price.
Compared to Advanced Micro Devices, which trades at 72% of its 52-week high, Nvidia stock reached 97% of its 52-week high, showing investors how winners will always attract bullish traders to bid them higher.
As an extension to Nvidia’s price action, Applied Materials is flirting with making new all-time highs, but wait, there’s more. Compared to the computer sector’s 265.2x P/E multiple, Applied Materials stock trades at 25.2x to bring a discount of 90% to the industry.
The so-called 'smart money' took notice, which could be one reason behind the $128.4 billion of institutional inflows into Applied Materials stock over the past 12 months. These institutions could be looking to close the stock's massive valuation gaps.
Should you invest $1,000 in Applied Materials right now?
Before you consider Applied Materials, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Applied Materials wasn't on the list.
While Applied Materials currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.
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