15 Best Hardware Stocks According to Hedge Funds

9. Applied Materials, Inc. (NASDAQ:AMAT)

Number of Hedge Fund Shareholders In Q1 2024: 79

Applied Materials, Inc. (NASDAQ:AMAT) is another semiconductor manufacturing equipment provider. Like its peers, it’s also at the center of US and China trade tensions, as the firm received a subpoena from the US government in May 2024 which asked it to disclose its sales to Chinese customers. Reuters’ sources believe that Applied Materials, Inc. (NASDAQ:AMAT) is currently being investigated for having sold equipment to China’s largest chipmaker SMIC. However, the same Chinese sales were at the center of a Barclays share price upgrade in June. It raised Applied Materials, Inc. (NASDAQ:AMAT)’s share price target to $225 from $165 and bumped the stock to Equal Weight.

By Q1 2024 end, 79 hedge funds part of Insider Monkey’s research were Applied Materials, Inc. (NASDAQ:AMAT)’s stakeholders. David Blood and Al Gore’s Generation Investment Management owned the most valuable stake which was worth $1 billion.

While Applied Materials, Inc. (NASDAQ:AMAT) is benefitting from a growth in Chinese spending, its forward P/E of 26.53 is only slightly higher than the market’s 21. This implies that investors expect moderate growth in the future. Commenting on these trends, CEO Gary Dickerson shared during the firm’s latest earnings call:

AI datacenter is just one example that illustrates how the major inflections that underpin the next generation of semiconductors are enabled by Applied Materials. Materials science and materials engineering are increasingly important to the industry’s roadmap. Applied has invested early to develop a broad, unique, and connected portfolio of materials engineering solutions that are critical to enable major semiconductor inflections from AI high-performance computing to ICAPS edge computing. We are translating those investments into consistent outperformance. Recent TechInsights data confirms that in 2023 Applied grew faster than the wafer fab equipment market for the fifth year in a row. We accomplished this despite headwinds created by trade rules that we estimate restricted us from more than 10% of the China market during that period.