#7 - Applied Materials (NASDAQ:AMAT)
Lam Research may be a more under-the-radar stock. But the leader in the wafer fabrication equipment is Applied Materials (NASDAQ:AMAT). AMAT stock is up 36% year-to-date. And it’s easy to see why. The company recently reported $5.16 billion in revenue which was a year-over-year increase of 24%. And Applied Materials also posted a 27% increase in GAAP EPS for the same quarter.
In the short term, Applied Materials will benefit from semiconductor companies needing to increase demand. However, this is a research-forward company that is considered to be the brains behind semiconductors. Thirty percent of the company’s employees are in research, and the company invests over $2 billion annually in R&D. This commitment is evident in the company’s library of over 14,000 patents.
This means that the company will be the go-to choice for companies engaged in the ongoing push towards the Internet of Things (IoT) and artificial intelligence (AI) applications.
About Applied Materials
Applied Materials, Inc engages in the provision of manufacturing equipment, services, and software to the semiconductor, display, and related industries. The company 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.
Read More - Current Price
- $174.88
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 14 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $222.05 (27.0% Upside)
The chip shortage could potentially cost the automotive industry over $60 billion in revenue in 2021 says the consulting firm, AlixPartners. That estimate covers the entire supply chain from the dealers and automakers down to the smallest suppliers. And this is exactly the kind of slowdown the U.S. is desperately trying to avoid as the economy continues its recovery from the Covid-19 pandemic.
President Biden is pledging to sign an executive order to launch a review of supply chains. The review will go beyond semiconductor chips and include large-capacity batteries, rare earth minerals, and pharmaceuticals. Anonymous sources familiar with the administration’s thinking have said the U.S. may consider a range of actions including financial incentives, tariffs, and/or changes in procurement policies.
However, in late February, General Motors (NYSE: GM) reported that it believes the worst of the company’s global chip shortage may be behind it. And some auto manufacturers such as Toyota are thought to have weathered the shortage better than most.
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