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Applied Materials Inc AMAT

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Applied Materials to Enjoy Widespread Equipment Demand in 2021; Raising FVE to $103

Abhinav Davuluri, CFA Sector Strategist

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.

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Company Profile

Business Description

Applied Materials is the world's largest supplier of semiconductor manufacturing equipment, providing materials engineering solutions to help make nearly every chip in the world. The firm's systems are used in nearly every major process step with the exception of lithography. Key tools include those for chemical and physical vapor deposition, etching, chemical mechanical polishing, wafer- and reticle-inspection, critical dimension measurement, and defect-inspection scanning electron microscopes.

3050 Bowers Avenue, P.O. Box 58039
Santa Clara, CA, 95052-8039
T +1 408 727-5555
Sector Technology
Industry Semiconductor Equipment & Materials
Most Recent Earnings Jan 31, 2021
Fiscal Year End Oct 27, 2020
Stock Type Cyclical
Employees 24,000