AMAT Expects Advanced DRAM Sales to Grow 40%: Can It Keep its Lead?

Applied Materials AMAT expects significant growth in its memory segment as it leans into rising customer demand for advanced dynamic random-access memory (DRAM) technologies. In the second quarter of fiscal 2025, management projected that revenues from its advanced DRAM customers to grow more than 40% in fiscal 2025. The growth is likely to be driven by an increase in demand for AMAT’s DDR5 and high-bandwidth memory.During the last earnings call, Applied Materials noted continued customer adoption of its products across DRAM applications. For example, its Sym3 Magnum etch system has generated more than $1.2 billion in revenues since its launch in February 2024.Moreover, Applied Materials’ Cold Field Emission eBeam technology is generating strong momentum in gate-all-around transistors and high-bandwidth memory. This helped AMAT generate record revenues in its Process Diagnostics and Control Business during the second quarter of fiscal 2025.Management emphasized that Applied Materials is focused on the most critical steps for next-generation DRAM and believes this has helped establish a strong leadership position. The company projects a substantial rise in leading-edge DRAM investments through 2025, driven by increased investments in the wafer fab equipment market and 3D DRAM.Applied Materials’ sustained focus on strengthening product capabilities will help the company expand its opportunities within the memory market.How Competitors Fare Against AMATLam Research LRCX, in the third quarter of fiscal 2025, stated that DRAM accounted for 23% of its systems revenues. This was supported by LRCX’s customer investments in DDR5, LPDDR5, and high-bandwidth memory. Additionally, Lam Research secured multiple critical etch wins at a major DRAM manufacturer with its new Akara etch system, which supports 3D DRAM architectures.ASML Holding ASML, in the first quarter of 2025, highlighted strong customer demand for its products. The demand was driven by ASML’s DRAM and logic customers, which are ramping leading-edge nodes using ASML’s NXE:3800E EUV systems. Additionally, 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 EstimatesShares of Applied Materials have gained 6.8% year to date compared with the Electronics - Semiconductors industry’s growth of 4.3%.AMAT YTD Price Return Performance Image Source: Zacks Investment ResearchFrom a valuation standpoint, Applied Materials trades at a forward price-to-sales ratio of 4.65X, lower than the industry’s average of 8X.AMAT Forward 12-Month P/S RatioImage Source: Zacks Investment ResearchThe Zacks Consensus Estimate for Applied Materials’ fiscal 2025 and 2026 earnings implies year-over-year growth of 9.48% and 5.48%, respectively. The estimates for fiscal 2026 and 2027 have been revised upward in the past seven days.Image Source: Zacks Investment ResearchApplied Materials currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ASML Holding N.V. (ASML): Free Stock Analysis Report Lam Research Corporation (LRCX): Free Stock Analysis Report Applied Materials, Inc. (AMAT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks