We recently published a list of the 12 Best Nanotechnology Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Applied Materials, Inc. (NASDAQ:AMAT) stands against the other best nanotechnology stocks to buy.
Nanotechnology, a groundbreaking concept introduced by Nobel Prize-winning physicist Richard Feynman in 1959 during a speech at Caltech, focuses on working with materials at an incredibly small scale—between one and 100 nanometers. At the nanoscale, things get interesting—surface area and quantum effects start playing a big role in how materials behave. Nanotechnology thus focuses on understanding and harnessing these unique properties, covering all kinds of research and technologies that take advantage of them.
Small Science VS Big Impact
One of the most exciting applications of nanotechnology is in the semiconductor industry. Today’s cutting-edge chips, like those powering iPhones and AI processors, rely on transistors that are just a few nanometers wide. Nanotechnology also plays a crucial role in improving semiconductor manufacturing, with specialized coatings and treatments that enhance equipment durability and efficiency, cutting downtime and boosting output.
Healthcare is another sector transformed by nanotechnology, becoming a cornerstone of modern biomedicine. From improving cancer diagnosis to enabling targeted drug delivery and advancing pharmaceutical manufacturing, it’s transforming the quality of treatments and boosting patient outcomes. This progress has led to the rise of nanomedicine, a field focused on innovative diagnostics, disease prevention, and streamlined drug development. In drug delivery, nanoscale technologies enhance how medications work by improving their stability and effectiveness. Perhaps the most exciting breakthrough is nanorobots—tiny machines that can travel through the bloodstream to deliver drugs precisely where they’re needed. This approach not only boosts precision but also reduces side effects, paving the way for more personalized and efficient treatments.
In the U.S., the National Nanotechnology Initiative (NNI) drives much of the research and development in this field. With participation from 30 federal agencies, the program underscores nanotechnology’s growing importance. The NNI’s 2024 budget request of $2.16 billion—the largest yet—focuses on both fundamental research and real-world applications. Given the trade tensions with China, which leads the world in nanotech startups, this investment is likely to grow, highlighting the strategic value of staying at the forefront of nanotechnology innovation.
The potential of nanotechnology is enormous. The global market is projected to soar to $33.63 billion by 2030, growing at an impressive 36.4% annually, according to Allied Market Research. Some sub-segments are expanding even faster—like the graphene market, expected to grow at 46.6% annually, and lipid nanoparticles, projected to rise at a 13.6% CAGR through 2029.
A technician in a clean room assembling a semiconductor chip using a microscope.
Our Methodology
To create our list of the Best Nanotechnology Stocks to Buy, we began by identifying companies with a strong presence in nanotechnology and its related industries. We explored ETFs and online resources to compile an initial pool of candidates. From there, we narrowed the list by analyzing hedge fund interest, using data from Insider Monkey’s Q3 2024 database, which tracks the activity of 900 hedge funds.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Applied Materials, Inc. (NASDAQ:AMAT)
Number of Hedge Fund Holders: 74
Applied Materials, Inc. (NASDAQ:AMAT), a leader in nanomanufacturing technology, has carved out a strong niche by engineering advanced equipment and software essential for semiconductor production, LCDs, and solar power solutions. The company’s innovative selective tungsten deposition process, akin to atomic-scale 3D printing, significantly enhances transistor efficiency and performance. With expertise in molecular nanotechnology—manipulating atoms to create precise materials—Applied Materials, Inc. (NASDAQ:AMAT) has successfully met soaring demand for its products, even during global chip shortages.
In fiscal 2024, Applied Materials, Inc. (NASDAQ:AMAT) achieved record-breaking results for the fifth consecutive year, with net sales reaching $27.2 billion, up 2.5% from the prior year. Non-GAAP earnings per share climbed 7.5% to $8.65. For Q1 2025, the company projects revenue of $7.15 billion and non-GAAP EPS of $2.29. Over the past fiscal year, Applied Materials returned more than $5 billion to shareholders through dividends and share buybacks.
In November, TD Cowen adjusted its price target for Applied Materials, Inc. (NASDAQ:AMAT) from $250 to $230 while maintaining a Buy rating. The firm acknowledged the company’s solid gross margin, supported by operational improvements and value-based pricing, but flagged concerns about slower quarter-over-quarter revenue growth compared to peers and potential volatility in end-market demand. Despite these challenges, the company remains well-positioned, bolstered by market share gains in Gate-All-Around (GAA) technology and a leading 25% share in the DRAM and High Bandwidth Memory (HBM) segments.
Parnassus Investments mentioned Applied Materials, Inc. (NASDAQ:AMAT) in its Q3 2024 investor letter. Here is what the fund said:
“Applied Materials, Inc. (NASDAQ:AMAT), the world’s largest supplier of wafer fabrication equipment for semiconductors, saw its shares pressured by negative sentiment around a potentially broad-based trend of capital expenditure cuts in memory spending.”
Overall, AMAT ranks 4th on our list of best nanotechnology stocks to buy according to hedge funds. While we acknowledge the potential of AMAT to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. 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 is originally published at Insider Monkey.
