Analyst Note
| Abhinav Davuluri, CFA |Wide-moat Applied Materials reported fiscal first-quarter results above management’s guidance, while guiding fiscal second-quarter revenue above our expectations. We note Applied and its peers have all called for strong growth in 2021, driven by record capital expenditure levels at foundry leader TSMC and improving DRAM spending. Management expects Applied’s second-quarter revenue to be up 36% year over year at the midpoint, with momentum persisting into the back half of 2021. Consequently, we are raising our fair value estimate to $103 per share from $74, as we incorporate substantial WFE growth (20% versus high-single digits previously) for 2021.