Can ASYS' AI Packaging Growth Offset Weak Mature Node Demand?

Amtech Systems (ASYS) is seeing strong growth from its AI packaging business, even as demand from mature node semiconductor markets stays weak. In the third quarter of fiscal 2025, revenues rose 26% on a sequential basis to $19.6 million, mainly driven by strong demand for equipment used in AI infrastructure.During the third quarter, sales of equipment used in AI infrastructure were five times higher than a year ago and made up about 25% of Thermal Processing Solutions’ revenues. Per management, bookings in the fiscal third quarter suggest that AI-related demand should remain strong going forward. This uptick in demand is expected to serve as a growth catalyst and shows how AI demand is becoming an important part of Amtech Systems’ business.However, Amtech Systems continues to face weak demand in its mature node semiconductor business, which remains a major headwind. In the third quarter of fiscal 2025, Amtech's revenues were affected by persistent weakness in the mature node semiconductor market. This, in turn, resulted in lower sales of wafer cleaning equipment, diffusion systems and high-temperature furnaces, all of which are used in chip production mainly in industrial and automotive applications. Continued weakness in the mature node semiconductor market is hurting the company's overall growth. While strong AI demand is helping Amtech offset weakness in mature node markets, full recovery depends on a pickup in mature node markets. The Zacks Consensus Estimate predicts a 24.4% decline in fiscal 2025 revenues.How Competitors Fare Against ASYSAmtech Systems faces competition from larger players, such as Applied Materials (AMAT) and Lam Research (LRCX), that are also targeting AI-related chip packaging.In the fourth quarter of fiscal 2025, Lam Research reported revenues of $5.17 billion, representing an increase of 34% year over year. The growth was driven by strong demand for Lam Research's etch and deposition tools, which are used for AI chip production.In the third quarter of fiscal 2025, Applied Materials generated revenues of $7.3 billion, representing an increase of 7.7% year over year. The growth was driven by strong demand for Applied Materials' advanced packaging tools, which are used in AI chips.ASYS’ Price Performance, Valuation and EstimatesShares of Amtech Systems have rallied 37.5% year to date compared with the Zacks Semiconductor - General industry’s growth of 34.2%.ASYS YTD Price Return PerformanceImage Source: Zacks Investment ResearchFrom a valuation standpoint, Amtech Systems trades at a forward price-to-sales ratio of 1.34X, lower than the industry’s average of 14.66X.ASYS Forward 12-Month P/S RatioImage Source: Zacks Investment ResearchThe Zacks Consensus Estimate for Amtech Systems’ fiscal 2025 earnings is pegged at a loss of six cents per share. The estimate has remained unchanged over the past 60 days. The Zacks Consensus Estimate for Amtech Systems’ fiscal 2026 earnings is pegged at 15 cents per share, and has remained unchanged over the past 60 days, indicating year-over-year growth of 350%.Image Source: Zacks Investment ResearchAmtech Systems currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.#1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>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 Lam Research Corporation (LRCX): Free Stock Analysis Report Applied Materials, Inc. (AMAT): Free Stock Analysis Report Amtech Systems, Inc. (ASYS): 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