Applied Materials Shares Jump in Premarket Trading
Applied Materials shares rose 6% in premarket trading ahead of Thursday’s open after CEO Gary Dickerson pointed to stronger long-term demand from chipmakers.
In an interview with Nikkei Asia, Dickerson said semiconductor companies are now sharing equipment demand forecasts that stretch two years or more into the future. Some chipmakers are reportedly providing visibility as far ahead as 2030.
CEO Signals Strong Chip Equipment Demand
Applied Materials is the world’s largest supplier of semiconductor manufacturing equipment. That makes the company one of the clearest public-market beneficiaries of rising chipmaker capital spending.
The company has a market value of around $453 billion. Its previous closing price of $570.50 also marked a sharp gain from its 52-week low of $154.47.
Dickerson said chipmakers are giving longer-term equipment demand outlooks to make sure their capacity expansions move smoothly. He added that this visibility gives equipment suppliers more confidence to increase manufacturing capacity.
Multi-Year Outlook Counters Chip Sector Concerns
The comments are important because chip equipment stocks have faced recent volatility.
On July 2, several semiconductor equipment names fell sharply amid concerns over NAND oversupply and possible delays in capital spending. KLA, Lam Research, and Teradyne all recorded steep one-day losses.
Dickerson’s outlook challenges that weaker narrative. His comments suggest that the AI-driven chip investment cycle may have longer-term strength, rather than being a short-lived demand surge.
AI Spending Supports Semiconductor Growth
Broader industry forecasts also support the bullish case for chip equipment makers.
Susquehanna recently raised its wafer fab equipment market forecast to $250 billion by 2028, a 20% increase from its previous estimate. The firm cited AI-related capital spending and tighter memory supply conditions.
SemiAnalysis has also projected major growth in AI infrastructure spending between 2024 and 2029. If those forecasts prove accurate, demand for semiconductor equipment could remain strong for several years.
Analyst Upgrades Boost Applied Materials Sentiment
Investor sentiment was also helped by fresh analyst price target increases.
TD Cowen raised its price target on Applied Materials to $700, while Mizuho increased its target to $650.
These upgrades added to optimism around the stock, especially after the company’s recent earnings performance.
Recent Earnings Strengthen the Bullish Case
Applied Materials reported strong fiscal second-quarter results on May 14.
The company posted earnings per share of $2.86, beating analyst expectations of $2.68. Revenue reached $7.91 billion, above forecasts of $7.68 billion.
Those results helped reinforce confidence that Applied Materials remains well positioned in the current semiconductor investment cycle.
Analysts Raise Earnings Expectations
Wall Street expectations have also moved higher ahead of Applied Materials’ fiscal third-quarter report.
Analysts have submitted 25 upward EPS revisions over the past 90 days, with no downward revisions. Consensus estimates now point to $3.39 in EPS and $8.94 billion in revenue for the upcoming report.
The next earnings release is scheduled for August 13 after the market close.
August Earnings Call Becomes Key Test
Investors will closely watch the August 13 earnings call for more details on the company’s long-term demand visibility.
The market will want to know whether major customers have made firm capacity expansion commitments. Investors will also look for updates on how Applied Materials plans to meet rising demand.
Any comments on export controls and customer planning in Asia will also be important, given the company’s exposure to the region.
Applied Materials Still Below Record High
Despite its strong rally, Applied Materials remains about 18% below its 52-week high of $739.67.
That leaves room for further recovery if investors continue to believe in the multi-year semiconductor equipment growth story.
