5 Best Semiconductor Equipment Stocks to Invest In

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

Number of Hedge Fund Holders: 70

Applied Materials, Inc. (NASDAQ:AMAT) is a California-based company that is engaged in the development, manufacturing, and marketing of semiconductor wafer fabrication equipment and more.

In the last three months, 23 Wall Street analysts covered Applied Materials, Inc. (NASDAQ:AMAT), and 17 kept a Buy rating on the stock. The average price target of $217.52 represented an upside of 10.18% at the time of writing on February 23.

On February 20, Argus analyst Jim Kelleher raised the price target on Applied Materials, Inc. (NASDAQ:AMAT)’s stock to $230 from $170 and maintained a Buy rating. 

Generation Investment Management mentioned Applied Materials, Inc. (NASDAQ:AMAT) in its second quarter 2023 investor letter. Here is what it said:

Applied Materials, Inc. (NASDAQ:AMAT): Semiconductor revenue has grown 6% per year since 2010, driven by increasing demand for smartphones, datacentres and electronic content in vehicles and industrial settings.4 Through work spanning six roadmaps covering many sub-themes within semiconductors (including industry consolidation, capital equipment and generative AI), we are confident that these trends will continue or even accelerate in the coming decades. The rise of generative AI in particular will require high-performing semiconductors, such as Nvidia’s GPUs, in datacentres.

Traditionally the industry relied on semiconductor manufacturers to deliver steady advances in semiconductor performance while reducing costs. This phenomenon is known as Moore’s Law, which was identified by Intel founder Gordon Moore. Traditionally, Moore’s Law relied on shrinking the light source used to expose photosensitive material on a silicon wafer to make smaller semiconductors, which in turn led to falling costs.

In recent years, however, Moore’s Law has slowed. Manufacturing has run up against the limits of physics. Making semiconductors smaller more cheaply has therefore become difficult. The latest generation of lithography machines that create this light source are marvels of modern science, but they are also expensive to produce, not to mention power-hungry. Delivering performance improvements in the most advanced semiconductors is now becoming costlier. This presents a risk, both to generative AI and a net zero world.

All is not lost, however. The semiconductor industry attracts some of the best minds in the world, many of whom are looking at alternative ways to continue to deliver more power-efficient and cheaper semiconductors. A key area of focus is around developing new materials used in manufacturing semiconductors, and new ways of applying (‘deposition’) and selectively removing (‘etch’) these materials to create the desired semiconductor. Applied Materials is one of the companies in the vanguard of these developments…” (Click here to read the full text)

You can also look at the 13 Best Buy-the-Dip Stocks To Buy Right Now and the 12 Best Gold Stocks Under $25.