Applied Materials, Inc. (AMAT): A Bull Case Theory

We came across a bullish thesis on Applied Materials, Inc. (NASDAQ:AMAT) on Substack by Stock Picker’s Corner. In this article, we will summarize the bulls’ thesis on AMAT. Applied Materials, Inc. (NASDAQ:AMAT)’s share was trading at $170.06 as of Jan 3^rd. AMAT’s trailing and forward P/E were 19.75 and 17.70 respectively according to Yahoo Finance.

Applied Materials Inc. (NASDAQ:AMAT), a leader in semiconductor equipment manufacturing, stands to benefit significantly from the ongoing shift in global production patterns, particularly as deglobalization accelerates and the U.S. reorients its manufacturing base. As tensions between the U.S. and China continue to escalate, especially in the tech and trade sectors, the semiconductor industry is seeing substantial growth in domestic production. A prime example is the construction of new semiconductor fabs, with 73 new facilities being built worldwide, 35 of which are in the West. Notably, 77% of these Western fabs are located in the United States, underscoring the trend of reshoring production to the U.S. This reshoring is partly a response to geopolitical risks, as well as a strategic move to reduce dependence on foreign manufacturing hubs, particularly in Asia.

For AMAT, this shift represents a significant opportunity. The company supplies advanced equipment necessary for the production of semiconductors, a critical component in nearly every modern technology product, from smartphones to military systems. As the U.S. increases its semiconductor manufacturing capacity, demand for AMAT’s products is expected to rise. Given its position in the semiconductor equipment sector, AMAT is well-positioned to capitalize on this shift, making it an attractive investment in the current geopolitical climate.

Applied Materials, Inc. (NASDAQ:AMAT) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 74 hedge fund portfolios held AMAT at the end of the third quarter which was 77 in the previous quarter. While we acknowledge the risk and potential of AMAT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AMAT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.