Track market-moving stories before they get noisy

Key Takeaways Applied Materials' broad chip equipment portfolio supports AI-driven advanced packaging growth.AMAT expects foundry, DRAM and advanced packaging to drive most 2026 equipment spending growth.Qnity posted strong AI-related growth but faces inventory, debt and China exposure risks. Applied Materials, Inc. (AMAT - Free Report) and Qnity Electronics (Q - Free Report) are two prominent players in the semiconductor supply chain, both involved in advanced packaging and stand out as major beneficiaries of the AI-driven semiconductor upcycle. Applied Materials sits at the heart of chip manufacturing, supplying critical equipment used by foundries to produce advanced semiconductors, and Qnity Electronics serves the fast-growing semiconductor market with a broad portfolio of advanced materials, CMP consumables, advanced packaging, interconnect chemistry and thermal management.

Given the major tailwind, let’s analyze their business models, risk profiles and long-term outlooks and examine which one looks like the better investment right now.

The Case for Applied Materials StockApplied Materials is its unmatched breadth across semiconductor wafer fabrication equipment manufacturing. Applied Materials offers solutions across deposition, materials engineering, etch, metrology, inspection, packaging and process integration, allowing customers to optimize manufacturing flows using a single vendor across multiple stages of production.

Management believes that leading-edge foundry-logic, DRAM and advanced packaging will account for more than 80% of the year-over-year growth in wafer fabrication equipment spending during 2026. In the second quarter of fiscal 2026, Applied Global Services, which accounts for AMAT’s equipment servicing business, generated $1.665 billion of revenues, up from $1.42 billion a year earlier, while its gross margin improved to 34.7% and its operating margin rose to 29.2%.

AMAT already offers what it describes as the industry’s broadest portfolio for the emerging panel trend, spanning chemical vapor deposition, etch, physical vapor deposition, digital lithography, electrochemical deposition and e-beam metrology and test. Now it plans to strengthen this portfolio through its acquisition of the NEXX business from ASMPT. The combined portfolio of NEXX and AMAT is designed to help chipmakers and systems companies build larger AI accelerators with higher energy-efficient performance.

Revenue composition further highlights the shift toward AI-driven semiconductor investment. Foundry, logic and other applications contributed 67% of segment revenues, DRAM accounted for 29%, and flash memory represented just 4%. The higher contribution from foundry-logic and DRAM is increasingly driving demand for leading-edge logic chips, high-bandwidth memory and advanced packaging technologies.

Collaboration is another important element of Applied Materials’ packaging strategy. Through the EPIC Center, AMAT and SK hynix plan to work on next-generation DRAM, HBM and 3D advanced packaging. These factors establish AMAT at a sweet spot in the packaging business. The Zacks Consensus Estimate for AMAT’s 2026 earnings is pegged at $12.14, implying year-over-year growth of 29%. Estimates have been revised upward in the past 30 days.

Image Source: Zacks Investment Research

The Case for Qnity Electronics StockQnity Electronics is benefiting from rising semiconductor complexity as AI shifts the industry from traditional transistor scaling toward vertically stacked chip architectures, where materials intensity, integration and reliability become increasingly critical. The company's momentum is already translating into strong financial performance. In first-quarter 2026, net sales increased 18% year over year to $1.32 billion, while organic sales grew 17%.

During the first quarter, organic sales in the Semiconductor Technologies segment grew 12%, supported by advanced logic, HBM, improving NAND demand and higher fab utilization. Qnity noted that 3-nanometer production continues to ramp up while meaningful activity has begun at 2-nanometer nodes. Adjusted operating EBITDA rose 22% to $411 million, and adjusted EBITDA margin expanded 125 basis points to 31.3%.

Qnity Electronics’ interconnect solutions (ICS) segment has become its fastest-growing business. The segment delivered 22% organic sales growth during the first quarter, driven by advanced packaging, advanced interconnects and thermal management. Revenues from these core AI-related product categories increased more than 50% year over year as the company benefited from data-center demand and production ramps from shorter-cycle Process of Record (POR) wins secured during 2025.

Management also highlighted new business wins with AI PCB manufacturers serving leading hyperscalers and premium smartphone OEMs, while increasing thermal management requirements continue to drive higher content per device. ICS generated an adjusted operating EBITDA margin of 28.5%, reflecting strong operating leverage and favorable product mix. However, Qnity faces several near-term challenges despite solid execution. Growth remains sensitive to customer inventory cycles, with recent semiconductor restocking benefits unlikely to persist.

Qnity Electronics’ cash flow is under pressure as elevated capital spending and IT separation investments reduce free cash flow and limit buybacks and deleveraging. Additionally, high debt raises interest costs, and significant China exposure leaves the company vulnerable to geopolitical and trade-related disruptions. The Zacks Consensus Estimate for Qnity’s 2026 earnings is pegged at $4.16, implying year-over-year growth of 24%. Estimates have been revised upward in the past 30 days.

Image Source: Zacks Investment Research

AMAT vs. Q: Price Performance & Valuation CheckQnity shares have risen 69.8% year to date, while Applied Materials has soared 123.9%.

YTD Performance Chart
Image Source: Zacks Investment Research

On the valuation front, Applied Materials trades at a forward 12-month price-to-sales (P/S) multiple of 11.20X, above its median of 9.29X, while Qnity Electronics trades at a P/S multiple of 5.11X, below its median of 5.29X.

Forward 12-Month (P/S) Valuation Chart
Image Source: Zacks Investment Research

Conclusion: Which Stock is a Safer Bet?Applied Materials appears to be the safer long-term investment. Its unmatched portfolio across semiconductor manufacturing equipment, expanding AI-driven advanced packaging opportunities, higher expected earnings growth, and robust high-margin services business provide greater visibility and resilience. While Qnity Electronics offers an attractive valuation and strong exposure to advanced packaging materials, its near-term outlook is tempered by customer inventory sensitivity, elevated capital spending, higher leverage and China-related risks. Investors seeking a balanced combination of growth, profitability and execution may find Applied Materials better positioned to capitalize on the AI semiconductor investment cycle.

AMAT and Q carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

July 23, 2026 07:30 ET  | Source: Applied Materials, Inc.

SANTA CLARA, Calif., July 23, 2026 (GLOBE NEWSWIRE) -- Applied Materials, Inc. today announced that it will hold its fiscal third quarter 2026 earnings conference call on Thursday, Aug. 13, 2026, at 4:30 p.m. ET / 1:30 p.m. PT.

The call will be webcast live at: https://ir.appliedmaterials.com. A replay will be available on the same day by 8:00 p.m. ET / 5:00 p.m. PT.

About Applied Materials
Applied Materials, Inc. (Nasdaq: AMAT) is the leader in materials engineering solutions that are at the foundation of virtually every new semiconductor and advanced display in the world. The technology we create is essential to advancing AI and accelerating the commercialization of next-generation chips. At Applied, we push the boundaries of science and engineering to deliver material innovation that changes the world. Learn more at www.appliedmaterials.com.

Contact:
Ricky Gradwohl (editorial/media) 408.235.4676
Mike Sullivan (financial community) 408.986.7977

An updated edition of the June 3, 2026 article.

A wide moat refers to companies with lasting competitive advantages that protect them from rivals, similar to how a moat defends a castle. Made famous by Warren Buffett, this strategy targets businesses that can sustain strong long-term profitability due to factors like distinct market positions, strong brand loyalty, cost advantages, network effects and regulatory barriers.

Among the companies that are recognized for their wide moats, some are Applied Materials, Inc. (AMAT - Free Report) , Texas Instruments Incorporated (TXN - Free Report) , Moody's Corporation (MCO - Free Report) , Visa Inc. (V - Free Report) and Walmart Inc. (WMT - Free Report) . These companies compete in industries with significant barriers to entry, which safeguard their market positions and promote consistent revenue growth by reducing the risk of new competitors.

Wide-moat companies generally benefit from several key factors such as brand strength, network effects, high customer switching costs, regulatory protections and economies of scale. These characteristics make it challenging for new entrants or existing competitors to erode their market share. Companies with wide moats typically benefit from strong pricing power, stable profit margins and the capacity to reinvest in their businesses, further reinforcing their competitive advantages.

The case for investing in wide-moat businesses is rooted in their ability to deliver steady, long-term returns. In contrast to companies operating in fiercely competitive industries, where profits can be highly volatile due to pricing pressures and rivalry, wide-moat businesses tend to show greater resilience during economic downturns and market turbulence. Their solid market positions and robust balance sheets enable them to endure challenges that might seriously impact less competitive firms.

Investing in wide-moat companies can be an effective strategy for building long-term wealth, as these businesses typically produce steady cash flows, navigate market volatility with resilience, and deliver value to shareholders through dividends and stock price growth. While no investment is entirely risk-free, companies with strong economic moats provide a level of durability that many investors seek in an ever-changing market. Our Wide Moat Screen makes it easy to identify high-potential stocks at any given time — just like the ones mentioned above.

Ready to uncover more transformative thematic investment ideas? Explore 39 cutting-edge investment themes with Zacks Thematic Investing Screens and discover your next big opportunity.

Applied Materials’ moat is supported by a strong position in semiconductor equipment, efficient operational scale and a broad portfolio. It is a dominant name in the semiconductor equipment sales domain. AMAT is one of the world’s largest suppliers of equipment for the fabrication of semiconductors, flat panel liquid crystal displays, and solar photovoltaic cells and modules. AMAT has the broadest and most diversified offerings as it provides solutions across multiple fabrication steps, such as deposition, materials engineering, etch, metrology and packaging.

Applied Materials expects to strengthen its position even further in wafer fabrication equipment (“WFE”) thanks to an expanding product portfolio. Furthermore, the emergence of data centers will continue to be a major contributor to the company's top-line growth with the growing demand for dynamic random access memory (“DRAM”) by the cloud service providers.

Applied Materials is seeing artificial intelligence (AI) adoption broaden and diversify, which is pushing wafer fab equipment spending toward leading-edge foundry-logic, DRAM and advanced packaging. Management expects these three areas to drive more than 80% of year-on-year total WFE growth in calendar 2026, with a similar profile in 2027. The company also expects its semiconductor equipment business to grow more than 30% in calendar 2026 as customers expand cleanroom capacity and accelerate equipment pull-ins.

Applied Materials’ semiconductor business continues to be on a growth trajectory with significant design wins. Moreover, the company's AI Design Forum bodes well for its strong focus on the development of new computing materials and designs. The industry's transition to 3D NAND is also helping the company to further expand the served available market. Applied Materials is a Zacks Rank #2 (Buy) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Texas Instruments has a strong position in the foundational analog and embedded processing semiconductor markets, which are critical for long-term growth in key industries like industrial, automotive, personal electronics and data center. It serves diverse end markets that balance individual ups and downs in multiple ways. For instance, the seasonality in the personal electronics business is balanced out by the industrial, communications, automotive and data center segments.

The company serves individuals and corporations, industrial customers and infrastructure providers. The emergence of 5G technology is aiding the performance of the company's analog products in the communication equipment market. All these are making its revenue stream relatively steady despite the dynamism in each of the markets served. This is very important for a company like Texas Instruments because it has huge facilities of its own that come along with high fixed costs.

Texas Instruments is focusing more on making chips under its internal manufacturing facilities instead of relying on outside foundries. The company aims to manufacture more than 95% of its wafers internally by 2030, with a significant portion of those on 300-millimeter wafers. By building its internal manufacturing, the company will gain better control over production, quality and costs. This will also reduce risks from supply-chain issues and global trade tensions. It also makes Texas Instruments more flexible in responding to customer needs. Over time, this approach can improve profit margins and strengthen the company’s position in the market as demand for reliable chip supply grows.

Texas Instruments, a Zacks Rank #2 stock, is one of the largest suppliers of analog and digital signal processing integrated circuits. The company’s compelling product lineup and efficient manufacturing strategies are anticipated to drive long-term earnings. Also, Texas Instruments is nearing the completion of a six-year elevated capital expenditure cycle, investing in 300-millimeter wafer fabs to secure low-cost manufacturing capacity at scale. This initiative positions the company to meet customer demand while enhancing margins and free cash flow. Further, its focus on innovation of the product portfolio across both the Analog and Embedded Processing segments remains a major positive.

Moody’s is a leader in credit ratings and analytics. Its position is fortified by regulatory reliance on its ratings and a reputation built over decades, creating high barriers for new entrants. Its dominant position in the credit rating industry, along with opportunistic acquisitions and restructuring efforts to diversify revenues and footprint, supports top-line expansion. A strong balance sheet position and earnings strength also keep the company’s capital distributions sustainable.

Moody’s has been meaningfully growing through strategic acquisitions, increasing scale and cross-selling opportunities across products and vertical markets. In August 2025, it announced its plans to secure a majority equity ownership in Middle East Rating & Investors Service. In June 2025, it fully acquired ICR Chile, strengthening its presence in Latin America’s domestic credit markets. In 2024, it announced the acquisition of Numerated Growth Technologies and a 100% stake in Global Credit Rating Company Limited (GCR) to deepen its presence in Africa’s credit market. These deals, along with several other strategic buyouts, will continue helping the company diversify revenues and be accretive to earnings. Moody's will continue to pursue opportunistic deals that are strategic fits and complement its existing operations.

Moody’s continues to pursue growth in areas outside the core credit ratings service. This Zacks Rank #2 company has increased its exposure to the banking and insurance industries and is diversifying into fast-growing professional services and enterprise risk solutions businesses. The rising share of the analytics business, which is not correlated with the volatility of interest rates, has added stability to top-line growth.

Visa, the global leader in digital payments, benefits from an extensive payment network that connects millions of merchants, banks and consumers worldwide. Its economic moat stems from the network effect, where the value of its services increases as more users and businesses participate. With a near-monopoly in card transactions, Visa generates significant revenues through transaction fees while facing minimal competition due to high regulatory and technological barriers in the payment processing industry.

Visa consistently achieves growth in payments volume and processed transactions. The company's robust market position, strategic acquisitions and digital payment trends contribute to revenue expansion. Visa's strategic emphasis on inorganic growth through mergers, acquisitions, and partnerships has solidified its dominance. The company's partnerships and investments underscore its ongoing efforts to extend its network and maintain a leading position in the payment industry. These strategic moves have expanded its global network, resulting in continuous growth in cross-border volumes.

Visa continues to drive product and platform innovation through solutions like Visa Token Service, Visa Checkout, and In-App Provisioning, reinforcing its leadership in secure digital payments. The company keeps pushing emerging form factors such as contactless, tap-to-pay, and secure remote commerce, while expanding partnerships across fintech and crypto-linked use cases. Visa has also moved quickly into agentic commerce. In April 2026, it unveiled Intelligent Commerce Connect, an ‘on ramp’ that lets businesses connect AI agents to payments and acceptance through a single integration. It is also expanding its Agentic Ready testing program from Europe into Asia Pacific and Latin America to validate enrollment, tokenization, authentication and authorization flows before broader rollout. Visa currently carries a Zacks Rank #2.

Walmart, the world’s largest retailer, operates more than 10,900 stores in 19 countries, serving roughly 270 million customers weekly through its vast network of supercenters, discount stores and e-commerce platforms. It thrives on everyday low prices and digital accessibility.

Walmart’s diverse business model is a major advantage. The company generates growth not only from stores but also through digital advertising, memberships and marketplace operations. These areas provide new profit streams that are less dependent on traditional retail sales. Advertising through Walmart Connect and international platforms like Flipkart Ads is growing quickly, while membership income from Walmart+ and Sam’s Club is also rising at a rapid pace.

Walmart’s progress in digital and logistics capabilities has also been impressive. The company uses its massive store network as fulfillment hubs, allowing it to deliver faster and more efficiently. Marketplace growth and greater use of Walmart Fulfillment Services are strengthening both customer convenience and profitability.

 This Zacks Rank #2 company is also investing heavily in automation and AI to improve productivity and simplify shopping experiences. Its international operations add another source of growth. Markets like China, Mexico and India (Flipkart) continue to post strong gains, driven by strong e-commerce demand and expansion in quick delivery services.

Alesco Advisors LLC An ESL Co acquired a new position in shares of Applied Materials, Inc. (NASDAQ:AMAT – Free Report) in the 1st quarter, according to the company in its most recent disclosure with the Securities and Exchange Commission. The firm acquired 2,884 shares of the manufacturing equipment provider’s stock, valued at approximately $986,000.

Other institutional investors and hedge funds also recently made changes to their positions in the company. Insight Advisors LLC PA acquired a new position in Applied Materials during the 1st quarter worth approximately $253,000. Saturna Capital Corp grew its stake in Applied Materials by 34.2% in the first quarter. Saturna Capital Corp now owns 1,590 shares of the manufacturing equipment provider’s stock valued at $543,000 after acquiring an additional 405 shares during the period. Danica Pension Livsforsikringsaktieselskab increased its holdings in shares of Applied Materials by 0.7% during the first quarter. Danica Pension Livsforsikringsaktieselskab now owns 78,906 shares of the manufacturing equipment provider’s stock valued at $26,969,000 after acquiring an additional 576 shares in the last quarter. ABN Amro Investment Solutions raised its position in shares of Applied Materials by 33.3% during the first quarter. ABN Amro Investment Solutions now owns 438,392 shares of the manufacturing equipment provider’s stock worth $149,838,000 after purchasing an additional 109,506 shares during the period. Finally, PNC Financial Services Group Inc. grew its position in Applied Materials by 13.9% in the 1st quarter. PNC Financial Services Group Inc. now owns 567,604 shares of the manufacturing equipment provider’s stock valued at $194,001,000 after purchasing an additional 69,366 shares during the period. Institutional investors own 80.56% of the company’s stock.

Wall Street Analysts Forecast Growth A number of research analysts have weighed in on AMAT shares. Wolfe Research raised their price objective on shares of Applied Materials from $500.00 to $550.00 and gave the company an “outperform” rating in a research note on Friday, May 15th. Mizuho increased their price target on Applied Materials from $540.00 to $650.00 and gave the company an “outperform” rating in a research report on Wednesday, July 8th. Weiss Ratings reaffirmed a “buy (b-)” rating on shares of Applied Materials in a report on Wednesday, June 24th. Susquehanna upped their target price on Applied Materials from $575.00 to $900.00 and gave the company a “positive” rating in a report on Tuesday, June 30th. Finally, Sanford C. Bernstein reiterated an “outperform” rating and set a $525.00 price target on shares of Applied Materials in a report on Friday, May 15th. One equities research analyst has rated the stock with a Strong Buy rating, twenty-seven have assigned a Buy rating and six have issued a Hold rating to the stock. According to MarketBeat.com, Applied Materials presently has an average rating of “Moderate Buy” and a consensus target price of $593.84.

Read Our Latest Research Report on AMAT

Insider Activity In other news, SVP Timothy M. Deane sold 8,621 shares of Applied Materials stock in a transaction dated Monday, June 15th. The stock was sold at an average price of $590.76, for a total transaction of $5,092,941.96. Following the completion of the sale, the senior vice president owned 134,631 shares in the company, valued at approximately $79,534,609.56. This trade represents a 6.02% decrease in their position. The sale was disclosed in a legal filing with the SEC, which can be accessed through this link. Also, SVP Omkaram Nalamasu sold 24,263 shares of the stock in a transaction on Tuesday, June 16th. The stock was sold at an average price of $593.43, for a total transaction of $14,398,392.09. Following the completion of the transaction, the senior vice president directly owned 146,916 shares in the company, valued at $87,184,361.88. The trade was a 14.17% decrease in their position. The disclosure for this sale is available in the SEC filing. In the last quarter, insiders have sold 278,088 shares of company stock worth $169,654,805. Company insiders own 0.30% of the company’s stock.

Key Applied Materials News Here are the key news stories impacting Applied Materials this week:

Positive Sentiment: Peer Taiwan Semiconductor Manufacturing announced plans to raise chipmaking prices by up to 10% in 2027, while wafer supplier IQE lifted guidance, reinforcing expectations for strong AI and data-center chip demand and more equipment spending across the semiconductor supply chain. Why Applied Materials (AMAT) Stock Is Up Today Positive Sentiment: Applied Materials’ installed base services business appears to be a growing recurring-revenue engine, with Applied Global Services revenue rising to $1.665 billion from $1.42 billion a year earlier as fab utilization improves. Is AMAT’s Installed Base Business Built for Long-Term Growth? Positive Sentiment: Industry commentary continues to point to AI-driven semiconductor growth as a tailwind for AMAT, with analysts highlighting the company as a beneficiary of sustained demand for advanced chips and manufacturing equipment. 3 Stocks to Buy From the Prospering Semiconductor Industry Neutral Sentiment: Applied Materials also joined CuspAI’s AI Materials Foundry as a founding member, a strategic move that could support long-term materials discovery efforts, though it is not an immediate earnings catalyst. Applied Materials (AMAT) Joins CuspAI Foundry To Speed Semiconductor Materials Discovery Negative Sentiment: Some market commentary flagged seasonal weakness for AMAT heading into late July, which could temper momentum if investors focus on near-term trading patterns. Three Stocks Just Flashed Seasonal Signals Applied Materials Stock Performance NASDAQ:AMAT opened at $564.55 on Wednesday. The business’s fifty day moving average is $537.43 and its 200 day moving average is $418.14. The firm has a market cap of $448.23 billion, a price-to-earnings ratio of 53.01, a PEG ratio of 1.34 and a beta of 1.57. The company has a debt-to-equity ratio of 0.22, a quick ratio of 1.80 and a current ratio of 2.51. Applied Materials, Inc. has a 52-week low of $154.46 and a 52-week high of $739.67.

Applied Materials (NASDAQ:AMAT – Get Free Report) last released its quarterly earnings data on Thursday, May 14th. The manufacturing equipment provider reported $2.86 EPS for the quarter, beating analysts’ consensus estimates of $2.68 by $0.18. Applied Materials had a net margin of 29.31% and a return on equity of 36.97%. The company had revenue of $7.91 billion during the quarter, compared to analyst estimates of $7.68 billion. During the same period last year, the business earned $2.39 earnings per share. Applied Materials’s revenue was up 11.4% compared to the same quarter last year. Applied Materials has set its Q3 2026 guidance at 3.160-3.560 EPS. Research analysts predict that Applied Materials, Inc. will post 12.14 EPS for the current year.

Applied Materials Announces Dividend The firm also recently declared a quarterly dividend, which will be paid on Thursday, September 10th. Shareholders of record on Thursday, August 20th will be issued a $0.53 dividend. The ex-dividend date of this dividend is Thursday, August 20th. This represents a $2.12 annualized dividend and a dividend yield of 0.4%. Applied Materials’s dividend payout ratio (DPR) is presently 19.91%.

Applied Materials Company Profile (Free Report)

Applied Materials, Inc is a U.S.-based supplier of equipment, services and software used to manufacture semiconductor chips, flat panel displays and other advanced materials. Headquartered in Santa Clara, California, the company designs and sells capital equipment and related technologies that enable production of integrated circuits, display panels and materials used across the electronics supply chain.

Applied Materials’ offerings include process equipment and factory software that support critical steps in device fabrication, such as deposition, etch, implantation, inspection and metrology, as well as systems for packaging and advanced heterogeneous integration.

Further Reading Five stocks we like better than Applied Materials Confidence Is Back, But Earnings Show the Consumer Is Being Picky AeroVironment’s Stock Is Down, But Drone Demand Is Taking Off 3M’s Redemption Arc: Can Q2 Earnings Change the Narrative? 3 Photonics Companies Making Quantum Tech Possible Want to see what other hedge funds are holding AMAT? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for Applied Materials, Inc. (NASDAQ:AMAT – Free Report).

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Key Takeaways Applied Materials' AGS revenues rose to $1.665B as higher fab utilization boosted recurring services.AMAT expects AGS to sustain mid-teens annual growth as revenue per installed tool continues to expand.AMAT has connected more than 35,000 chambers to AIx software for AI-powered monitoring and analytics. Applied Materials’ (AMAT - Free Report) large installed base has turned into a recurring revenue engine. Applied Global Services (AGS), under which the servicing of installed bases is reported, has generated $1.665 billion in revenues, up from $1.42 billion a year earlier, reflecting higher fab utilization.

AGS’ gross margin improved to 34.7% and its operating margin rose to 29.2%. The strategic value of AGS is that it adds resilience to Applied Materials’ profit model. Unlike the more cyclical equipment business, services are tied to a growing installed base and to customer needs throughout the tool lifecycle.

Management said AGS is another important growth driver because Applied Materials increases the revenue it generates “per tool” on top of a growing installed base. AMAT expects the AGS segment to deliver a sustainable annual growth rate in the mid-teens, potentially higher this year. That makes AGS an important bridge between one-time equipment sales and long-duration customer relationships.

What makes AGS especially relevant in the AI era is the company’s AI-enabled service layer. Applied Materials said that more than 35,000 chambers are connected to its AIx software capabilities, which use AI-powered monitoring, diagnostics and analytics. This matters because Applied Materials’ broader AI and advanced-node strategy depends on execution, visibility and support after installation.

In that setting, AGS helps stabilize Applied Materials’ revenue base, deepen customer relationships and improve operating leverage as the company scales. The segment’s margin profile, recurring nature and AI-driven service enhancements make it a valuable part of Applied Materials’ long-term earnings power.

How Competitors Fare Against AMATSince AMAT serves its own installed base through the AGS business, there are no competitors in this segment. But in the broader product category, AMAT competes with Lam Research (LRCX - Free Report) and ASML Holding (ASML - Free Report) .

ASML is experiencing strong demand from DRAM and logic customers, which are ramping up leading-edge nodes using ASML’s NXE:3800E EUV systems. Additionally, ASML noted that multiple DRAM customers are adopting EUV lithography, which helps shorten cycle time and lower costs. However, AMAT offers a broad range of WFE products that do not compete directly with ASML and Lam Research, making the stock worth holding.

Lam Research secured multiple critical etch wins at a major DRAM manufacturer with its new Akara etch system, which supports 3D DRAM architectures. This was supported by LRCX’s customer investments in DDR5, LPDDR5 and high-bandwidth memory. Lam Research’s Aether dry-resist technology was recently selected as the production tool of record for a leading DRAM customer, securing a foothold in this high-growth segment.

AMAT’s Price Performance, Valuation and EstimatesShares of Applied Materials have surged 104.5% year to date compared with the Zacks Electronics - Semiconductors industry’s growth of 27.4%.

AMAT YTD Performance Chart
Image Source: Zacks Investment Research

From a valuation standpoint, Applied Materials trades at a forward price-to-sales ratio of 12.81X, higher than the industry’s average of 10.48X.

AMAT Forward 12-Month (P/S) Valuation Chart
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 and 2027 earnings implies year-over-year growth of 29% and 34%, respectively. The estimates for fiscal 2026 and 2027 have been revised upward over the past seven days.

Image Source: Zacks Investment Research

Applied Materials currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the latest trading session, Applied Materials (AMAT - Free Report) closed at $524.09, marking a -1.05% move from the previous day. The stock's performance was behind the S&P 500's daily loss of 0.19%. Meanwhile, the Dow lost 0.59%, and the Nasdaq, a tech-heavy index, lost 0.05%.

The stock of maker of chipmaking equipment has fallen by 14.17% in the past month, lagging the Computer and Technology sector's loss of 4.32% and the S&P 500's gain of 0.55%.

The upcoming earnings release of Applied Materials will be of great interest to investors. The company's earnings report is expected on August 13, 2026. On that day, Applied Materials is projected to report earnings of $3.36 per share, which would represent year-over-year growth of 35.48%. Meanwhile, the latest consensus estimate predicts the revenue to be $9 billion, indicating a 23.28% increase compared to the same quarter of the previous year.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $12.14 per share and revenue of $33.38 billion, indicating changes of +28.87% and +17.67%, respectively, compared to the previous year.

It is also important to note the recent changes to analyst estimates for Applied Materials. Recent revisions tend to reflect the latest near-term business trends. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the business health and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed a 0.26% increase. Applied Materials presently features a Zacks Rank of #1 (Strong Buy).

In the context of valuation, Applied Materials is at present trading with a Forward P/E ratio of 43.65. For comparison, its industry has an average Forward P/E of 43.65, which means Applied Materials is trading at no noticeable deviation to the group.

It's also important to note that AMAT currently trades at a PEG ratio of 1.35. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Electronics - Semiconductors industry had an average PEG ratio of 1.69 as trading concluded yesterday.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 40, which puts it in the top 17% of all 250+ industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Keep in mind to rely on Zacks.com to watch all these stock-impacting metrics, and more, in the succeeding trading sessions.

The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price. Do they really matter, though?

Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about Applied Materials (AMAT - Free Report) .

Applied Materials currently has an average brokerage recommendation (ABR) of 1.45, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 38 brokerage firms. An ABR of 1.45 approximates between Strong Buy and Buy.

Of the 38 recommendations that derive the current ABR, 28 are Strong Buy and three are Buy. Strong Buy and Buy respectively account for 73.7% and 7.9% of all recommendations.

Brokerage Recommendation Trends for AMAT

Check price target & stock forecast for Applied Materials here>>>

While the ABR calls for buying Applied Materials, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.

Are you wondering why? The vested interest of brokerage firms in a stock they cover often results in a strong positive bias of their analysts in rating it. Our research shows that for every "Strong Sell" recommendation, brokerage firms assign five "Strong Buy" recommendations.

In other words, their interests aren't always aligned with retail investors, rarely indicating where the price of a stock could actually be heading. Therefore, the best use of this information could be validating your own research or an indicator that has proven to be highly successful in predicting a stock's price movement.

Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock's price performance in the near future. Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision.

Zacks Rank Should Not Be Confused With ABRIn spite of the fact that Zacks Rank and ABR both appear on a scale from 1 to 5, they are two completely different measures.

Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.

Analysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide.

On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks.

There is also a key difference between the ABR and Zacks Rank when it comes to freshness. When you look at the ABR, it may not be up-to-date. Nonetheless, since brokerage analysts constantly revise their earnings estimates to reflect changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in predicting future stock prices.

Is AMAT a Good Investment?In terms of earnings estimate revisions for Applied Materials, the Zacks Consensus Estimate for the current year has increased 0.3% over the past month to $12.14.

Analysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term.

The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #1 (Strong Buy) for Applied Materials. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Therefore, the Buy-equivalent ABR for Applied Materials may serve as a useful guide for investors.

Cantillon Capital Management LLC trimmed its position in Applied Materials, Inc. (NASDAQ:AMAT – Free Report) by 48.8% during the first quarter, according to its most recent disclosure with the Securities and Exchange Commission (SEC). The fund owned 1,521,843 shares of the manufacturing equipment provider’s stock after selling 1,451,818 shares during the quarter. Applied Materials accounts for 3.5% of Cantillon Capital Management LLC’s holdings, making the stock its 8th largest holding. Cantillon Capital Management LLC owned 0.19% of Applied Materials worth $520,151,000 at the end of the most recent quarter.

Several other institutional investors have also added to or reduced their stakes in the company. Vanguard Group Inc. lifted its stake in Applied Materials by 0.4% during the fourth quarter. Vanguard Group Inc. now owns 76,779,340 shares of the manufacturing equipment provider’s stock worth $19,731,523,000 after purchasing an additional 330,197 shares during the last quarter. Capital Research Global Investors increased its stake in shares of Applied Materials by 119.8% in the 4th quarter. Capital Research Global Investors now owns 32,707,049 shares of the manufacturing equipment provider’s stock valued at $8,405,458,000 after purchasing an additional 17,829,377 shares during the last quarter. Morgan Stanley raised its holdings in shares of Applied Materials by 3.4% during the 4th quarter. Morgan Stanley now owns 11,470,835 shares of the manufacturing equipment provider’s stock worth $2,947,891,000 after buying an additional 373,012 shares in the last quarter. Norges Bank acquired a new position in shares of Applied Materials during the 4th quarter worth $2,858,543,000. Finally, UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC lifted its position in shares of Applied Materials by 17.1% during the 4th quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC now owns 10,688,232 shares of the manufacturing equipment provider’s stock worth $2,746,769,000 after buying an additional 1,558,749 shares during the last quarter. 80.56% of the stock is currently owned by institutional investors and hedge funds.

Applied Materials Price Performance Shares of AMAT opened at $529.66 on Monday. Applied Materials, Inc. has a 12-month low of $154.46 and a 12-month high of $739.67. The business has a 50-day simple moving average of $533.12 and a two-hundred day simple moving average of $414.11. The company has a quick ratio of 1.80, a current ratio of 2.51 and a debt-to-equity ratio of 0.22. The stock has a market cap of $420.53 billion, a PE ratio of 49.73, a PEG ratio of 1.35 and a beta of 1.57.

Applied Materials (NASDAQ:AMAT – Get Free Report) last posted its earnings results on Thursday, May 14th. The manufacturing equipment provider reported $2.86 EPS for the quarter, beating the consensus estimate of $2.68 by $0.18. Applied Materials had a return on equity of 36.97% and a net margin of 29.31%.The firm had revenue of $7.91 billion during the quarter, compared to the consensus estimate of $7.68 billion. During the same period last year, the company earned $2.39 earnings per share. The business’s quarterly revenue was up 11.4% on a year-over-year basis. Applied Materials has set its Q3 2026 guidance at 3.160-3.560 EPS. Analysts anticipate that Applied Materials, Inc. will post 12.14 earnings per share for the current fiscal year.

Applied Materials Announces Dividend The firm also recently disclosed a quarterly dividend, which will be paid on Thursday, September 10th. Investors of record on Thursday, August 20th will be issued a $0.53 dividend. This represents a $2.12 dividend on an annualized basis and a yield of 0.4%. The ex-dividend date is Thursday, August 20th. Applied Materials’s dividend payout ratio (DPR) is 19.91%.

Insider Buying and Selling at Applied Materials In related news, Director Thomas J. Iannotti sold 9,250 shares of Applied Materials stock in a transaction that occurred on Tuesday, June 16th. The shares were sold at an average price of $599.77, for a total transaction of $5,547,872.50. Following the sale, the director directly owned 40,559 shares in the company, valued at $24,326,071.43. This trade represents a 18.57% decrease in their position. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is available at this hyperlink. Also, insider Prabu G. Raja sold 10,000 shares of the business’s stock in a transaction that occurred on Thursday, June 18th. The stock was sold at an average price of $633.53, for a total transaction of $6,335,300.00. Following the sale, the insider directly owned 346,642 shares in the company, valued at $219,608,106.26. The trade was a 2.80% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. Insiders sold 278,088 shares of company stock worth $169,654,805 over the last quarter. Insiders own 0.30% of the company’s stock.

Analyst Ratings Changes Several analysts recently weighed in on AMAT shares. Argus raised their price objective on Applied Materials from $420.00 to $500.00 and gave the company a “buy” rating in a research note on Tuesday, May 19th. Erste Group Bank raised Applied Materials from a “hold” rating to a “buy” rating in a research note on Monday, April 27th. Cantor Fitzgerald increased their target price on shares of Applied Materials from $650.00 to $850.00 and gave the stock an “overweight” rating in a report on Monday, June 29th. Deutsche Bank Aktiengesellschaft raised their price target on shares of Applied Materials from $450.00 to $550.00 and gave the company a “buy” rating in a research note on Friday, May 15th. Finally, Needham & Company LLC lifted their price target on shares of Applied Materials from $530.00 to $740.00 and gave the company a “buy” rating in a report on Friday, July 10th. One equities research analyst has rated the stock with a Strong Buy rating, twenty-seven have given a Buy rating and six have given a Hold rating to the stock. According to data from MarketBeat, Applied Materials presently has a consensus rating of “Moderate Buy” and an average price target of $593.84.

Check Out Our Latest Report on Applied Materials

Key Stories Impacting Applied Materials Here are the key news stories impacting Applied Materials this week:

Positive Sentiment: Erste Group Bank raised its FY2026 and FY2027 earnings estimates for Applied Materials and reiterated a Buy rating, signaling confidence in the company’s growth outlook and AI-driven demand. Article link Positive Sentiment: Applied Materials CEO comments reinforcing the AI investment thesis may help support longer-term sentiment around the stock. Article link Neutral Sentiment: Zacks noted that AMAT has been drawing increased attention from investors, but the piece was mainly a stock-screening update rather than a new fundamental catalyst. Article link Neutral Sentiment: Recent commentary suggested Applied Materials may be trading above fair value after a strong multi-year run, which could limit upside even if earnings remain solid. Article link Negative Sentiment: A broad semiconductor selloff is pressuring AMAT along with peers like AMD and Intel, as the market rotates out of chip stocks and into other areas. Article link Applied Materials Company Profile (Free Report)

Applied Materials, Inc is a U.S.-based supplier of equipment, services and software used to manufacture semiconductor chips, flat panel displays and other advanced materials. Headquartered in Santa Clara, California, the company designs and sells capital equipment and related technologies that enable production of integrated circuits, display panels and materials used across the electronics supply chain.

Applied Materials’ offerings include process equipment and factory software that support critical steps in device fabrication, such as deposition, etch, implantation, inspection and metrology, as well as systems for packaging and advanced heterogeneous integration.

Further Reading Five stocks we like better than Applied Materials Strait of Hormuz Tensions Spike Tanker Trade: These 2 Stocks Are Set to Benefit Shopify’s Quiet AI Strategy Could Be Its Biggest Advantage Yet Why These 3 Nuclear ETFs Are Getting a Fresh Look as AI Power Demand Rises 3 Aerospace Suppliers That Could Benefit as Aircraft Makers Face Bottlenecks

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Businessman trading online stock market on teblet screen, digital investment concept

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One of our favorite tech-focused closed-end funds (CEFs) is showing a pattern we love to see. What I’m going to show you below is one of my favorite setups for future gains for us, while we collect strong dividends, too.

The fund in question—the BlackRock Technology and Private Equity Term Trust (BTX)—yields 7.4% as I write this, so we’re getting paid handsomely while we wait for those gains to materialize.

Plus, the performance of this CEF’s underlying portfolio, or its “total NAV return” in CEF-speak, has earned enough over the past 12 months—43.8%, to be exact—to pay that dividend many times over, so the payout looks safe (and is paid monthly, to boot).

BTX Total Returns

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There’s something else about this chart that I want to draw your attention to: the purple line, or the fund’s total return based on market price (which is more influenced by investor sentiment). It trails the fund’s NAV, and the gap has been widening.

MORE FOR YOU

This is possible with CEFs like BTX because their closed-share structure lets the market over- or underprice a fund relative to how its portfolio is doing.

That’s the start of our opportunity with BTX. To get at it in full, we first need to talk about why investors are suddenly nervous about one corner of tech in particular: semiconductors.

Fact is, we’re now in the midst of the third major drawdown in “semis” this year, and it’s left the benchmark for this sector, the VanEck Semiconductor ETF (SMH), a full 9% off its year-to-date high, as of this writing. That may not sound bad, but it comes at a time when the S&P 500, benchmarked by State Street SPDR S&P 500 ETF (SPY), is basically at its all-time high.

Before we drill into what ails semis, and the growth (and dividend) opportunity it’s setting up for us in BTX, let’s do something most media outlets rarely do when discussing these products: talk about what they do, and following from that, why investors are so downcast on them all of a sudden.

The place to start, as is the case with so many things these days, is AI.

Semiconductors, in a nutshell, are the chips that power modern electronics. As a result of the data-center buildout, the stocks that make up SMH—like NVIDIA (NVDA), Micron Technology (MU), ASML Holding (ASML), Texas Instruments (TXN), Intel (INTC), Advanced Micro Devices (AMD), Broadcom (AVGO) and Applied Materials (AMAT)—have soared.

However, such a fast rise in names like these in such a short time makes some investors nervous. That’s natural, especially when you consider that many of these stocks are far from flashy growth names. Texas Instruments, for example, has been around for generations, yet its stock has returned 78.2% in 2026 alone.

Beyond the nerves, however, there is simple profit-taking. SMH, after all, has more than doubled in the past year.

In other words, the recent decline in semis makes sense. But a prudent investor should ask: Is this selloff justified, or is it again time to buy in?

Semiconductor Demand Is Still SoaringIf we look at the facts, it seems quite clear that demand has not waned. Not even a little.

The world’s largest chipmaker (by a huge margin) is Taiwan Semiconductor Manufacturing, or TSMC. The company just reported a 67.9% year-over-year sales increase for June, announcing the news before their scheduled earnings release.

SemiAnalysis analyst Sravan Kundojjala also told CNBC that this shows strength for the entire market: “The demand-supply situation in AI is still quite tight, and TSMC is sold out on N3, which is targeted by all leading AI GPU and CPUs this year,” he said.

So the sales are still there, and demand is still red-hot. But what about these companies’ valuations?

On the one hand, stocks like Broadcom (trading at 67-times its last 12 months of earnings), ASML Holding (59.9) and Texas Instruments (53.3) are on the pricey side, while NVIDIA (32.3) and Micron (22.2) are still relatively cheap compared to the broader market. In fact, both of these AI darlings are in fact cheaper than the S&P 500, which currently has a 32.6 P/E ratio.

So some semiconductor stocks are bargains, based on their P/E ratios, while others aren’t. That’s not terribly odd on its own. But this is: The semi firms growing their sales the fastest are the cheapest. Check out the revenue growth from Micron (in orange) and NVIDIA (in purple) below.

Tech Revenue Soars

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With sales far ahead of the higher-priced companies, NVIDIA and Micron are clearly high-value stocks. But why is the market pricing them so cheaply?

That’s a whole other article, but suffice it to say, both of these stocks are very much AI darlings and in the media spotlight, so they tend to gain (and fall) aggressively when the mood around AI shifts. And over the last few weeks, investors have soured on the AI narrative somewhat, despite the strong data around the AI buildout. That’s where our BTX opportunity comes in.

This CEF Gives Us “Discount-Driven” Tech Growth (and Plenty of Dividend Cash)In a market like this, we especially want to avoid ETFs like SMH, which, because of the indices they track, must hold both pricey and cheaper semiconductor stocks. A more actively managed tech fund, like BTX, avoids this problem, and it pays us that 7.4% dividend, too—compared to a sad 0.2% for SMH.

The fund also holds both of our undervalued semiconductor names—Micron and NVIDIA—as well as a mix of other high-flying tech companies, like privately held quantum-computing firm PsiQuantum; Lumentum Holdings (LITE), a maker of optical-networking gear used by AI systems; and even Space Exploration Technologies (SPCX). This gives us diversification beyond the partly overplayed semiconductor sector while still getting us into the cheaper chipmaker stocks.

And the best part is, BTX itself is a bargain right now.

BTX Discount to NAV

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With the fund’s market price trailing its NAV, its discount to NAV (a key CEF value metric) has widened to attractive levels. Earlier this year, BTX saw its discount widen to close to 20%, but as tech has recovered, its discount has faded—until the recent volatility in tech caused that discount to widen a bit again.

That’s left us with that tidy setup I mentioned earlier: a still-wide discount that’s narrowing. Then there are the dividends.

With that 7.4% dividend yield, BTX is a generous payer, and since the fund’s NAV is up so much in the past year, it has the profits to keep paying that dividend without eating into said NAV to fund them. So we can collect a reliable income stream while we wait for the fund’s discount to close and the wider semiconductor market to recover.

That leaves us with a fund paying a well-covered 7.4% dividend, trading at a 13.7% discount that’s narrowing, and with convincing data that the semiconductor selloff is overblown. That’s a great setup for us to buy more of smartly run BTX.

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Applied Materials (NASDAQ: AMAT | AMAT Price Prediction) and KLA (NASDAQ: KLAC) both closed strong quarters tied to AI infrastructure buildout. Applied posted Q2 FY2026 revenue of $7.91 billion on May 14, 2026. KLA reported Q3 FY2026 revenue of $3.415 billion on April 29, 2026. Both beat consensus. Their playbooks look nothing alike.

AI Fab Tools Lift One. Inspection Dominance Lifts the Other. Applied’s Semiconductor Systems segment delivered $5.965 billion at a 35.1% operating margin, up from 32.8%. DRAM mix moved to 29% of that segment, reflecting real HBM pull. CEO Gary Dickerson told investors Applied delivered “record quarterly performance” and now expects the semi equipment business to grow more than 30% in calendar 2026, raised from an earlier 20% call. That is a rare mid-cycle upgrade.

KLA’s story is narrower and richer. Process Control brought in $3.083 billion, roughly 90% of revenue, at a non-GAAP gross margin guide of 61.75% for June. Rick Wallace flagged “continued market share momentum in process control” backed by third-party industry data. Fewer product lines, harder moat.

Business Driver AMAT KLA Main revenue engine Semi Systems $5.965B Process Control $3.083B YoY revenue growth 11.4% 11.5% China revenue share 27% Meaningful, more insulated per analysts Breadth Play vs. Specialist Fortress Applied is widening the net. New Gate-All-Around tools like Precision Selective Nitride PECVD and Trillium ALD, the agreement to acquire ASMPT’s NEXX business for panel-level advanced packaging, and EPIC Center partnerships with TSMC, SK hynix, Micron and Samsung keep Applied embedded in every atomic-layer transition. This makes AMAT the more comprehensive AI manufacturing play, capturing raw physical volume of global foundry expansion.

KLA leans harder on one dominant niche. Inspection and metrology carry structurally higher margins, and Barclays upgraded KLAC to Overweight citing relative insulation from China export controls. The tradeoff: KLA’s diagnostic business is sensitive to wafer-start fluctuations.

The Next Test Is Cash and China Applied’s free cash flow fell to $210 million, down 80.21% YoY on working capital consumption. KLA’s FCF also softened to $622 million, off 36.97%, but the absolute figure remains healthier. Watch whether Applied converts its Q3 revenue guide of roughly $8.95 billion into cash, and whether KLA hits its $3.575 billion June-quarter target.

Why I Lean Toward Applied Materials Right Now AMAT is the sharper AI-infrastructure vehicle today. The 30%+ calendar 2026 equipment growth call, GAA tool ramp, and HBM exposure line up with where fab spending is going. KLA remains a beautiful business, and its 17th consecutive dividend increase plus a fresh $7 billion buyback authorization reward patient holders. For direct leverage to physical AI capacity coming online, Applied offers the clearest exposure. That thesis weakens if China restrictions tighten materially or if Applied’s cash conversion stays weak past one more quarter.

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Key Takeaways MU expanded its AI memory and storage portfolio for training and inference workloads.AMAT introduced new AI chip manufacturing systems for DRAM and advanced packaging.CSCO raised 2026 revenue guidance on AI infrastructure demand and expanded its NVIDIA partnership. Technology stocks have been taking a beating lately. However, the information technology sector has outperformed its peers and has primarily been responsible for the broader market rally over the past three years.

Artificial intelligence (AI), especially generative AI, stocks have emerged as the industry’s darling as their widespread adoption has been boosting Wall Street. The space is poised to get a further boost with the advent of agentic AI, while tech companies continue to pump billions of dollars into AI infrastructure.

Needless to say, the AI boom is far from over, and there’s still a lot of room to play, as the recent decline appears to be temporary. We have identified three AI-driven stocks that are poised to excel in the second half of 2026.

These three stocks are Micron Technology, Inc (MU - Free Report) , Applied Materials, Inc. (AMAT - Free Report) and Cisco Systems, Inc. (CSCO - Free Report) . Each of our picks currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Micron TechnologyMicron Technology, through its global brands, namely Micron, Crucial and Ballistix, markets high-performance memory and storage technologies, including Dynamic Random Access Memory (DRAM), NAND flash memory, NOR Flash and other technologies. The company’s solutions are used in leading-edge computing, consumer, networking, mobile, automotive, industrial and data center products. 

Micron Technology recently announced that it has reached a deal with Anthropic to co-design next-generation AI memory and storage architectures. The strategic partnership includes a long-term supply arrangement, Micron's investment in Anthropic's Series H funding round and deployment of Claude AI across Micron's engineering and manufacturing operations.

The company also recently launched its expanded portfolio of AI-optimized memory and storage products, which includes HBM4, a 256GB SOCAMM2 module, 256GB DDR5 RDIMMs, and the 245TB Micron 6600 ION SSD. The new range of products is aimed at boosting AI training and inference workloads from data centers to edge devices.

The company’s third-quarter fiscal 2026 revenue outlook of around $33.5 billion reflects strong AI infrastructure spending.

Moreover, Micron has a debt-to-equity ratio of 5.1%, which is lower than the Computer - Integrated System industry’s 36.8%. The company’s ROE stands at 72.4% compared to the sub-industry’s 22.1%.  The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year and next-quarter earnings has improved 26.1% and 46.3%, respectively, over the last 60 days.

Applied Materials, Inc.Applied Materials is a leading supplier of equipment used to manufacture semiconductor devices, flat panel displays and solar photovoltaic products. Applied Materials has given a boost to its AI semiconductor development through innovations in materials engineering, advanced packaging, and memory technologies.

The company earlier this year introduced new deposition, etch, and materials-modification systems to boost next-generation AI chips, including 2nm-and-beyond logic technologies.  Applied Materials has also announced the acquisition of NEXX in a bid to expand its advanced packaging capabilities. The technology will help larger AI accelerator designs using chiplets, HBM stacks, and advanced substrates, giving more powerful AI systems.

Last month, Applied Materials introduced new semiconductor manufacturing systems that are focused on DRAM and advanced packaging for AI chips. These will allow higher-yield HBM stacking and improved AI accelerator performance.

The Zacks Rank #1 company has a debt-to-equity ratio of 22%, which is lower than the Electronics-Semiconductors industry’s 66.3%. The company’s ROE stands at 37% compared to the sub-industry’s 35.2%. The company has an expected earnings growth rate of 28.8% for the current year. The Zacks Consensus Estimate for current-year and next-quarter earnings has improved 8.7% and 8.6%, respectively, over the last 60 days.

Cisco Systems, Inc.Cisco Systems has given a boost to its AI strategy by developing secure, high-performance networking infrastructure for the AI era. Last year, the Zacks Rank #1 company expanded its partnership with NVIDIA Corporation (NVDA - Free Report) , combining Cisco Silicon One networking technology with NVIDIA Spectrum-X to come up with AI-ready data center architectures.

Cisco also launched the Cisco Secure AI Factory with NVIDIA, integrating networking, security, and AI infrastructure solutions to simplify enterprise AI deployment. Earlier, Cisco introduced AI-ready data center innovations, including AI PODs, Unified Nexus Dashboard improvements and Spectrum-X integration.

Cisco Systems raised its 2026 revenue guidance to $62.8-$63.0 billion, driven by solid demand for AI data-center infrastructure and massive cloud-provider orders.

Cisco has a debt-to-equity ratio of 39.6%, which is lower than the Computer-Networking industry’s 44.7%%. The company’s ROE stands at 34.3% compared to the sub-industry’s 27.9%. The company has an expected earnings growth rate of 12.3% for the current year. The Zacks Consensus Estimate for current-year and next-quarter earnings has improved 2.6% and 5.5%, respectively, over the last 60 days.

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Shares of Intel (NASDAQ:INTC | INTC Price Prediction) are down 4% to $104.97 in Monday morning trading, while Advanced Micro Devices (NASDAQ:AMD) stock is off 4% to $533.58 and Applied Materials (NASDAQ:AMAT) shares are down 4% to $581. The selling started at the open and leveled out into mid-morning.

The move caps a blistering run for the chip complex. Intel stock is up 182% year to date (YTD), AMD shares are up 147%, and Applied Materials shares have gained 126%. With the NASDAQ 100 down 1.28% on the session, the broader tech tape has weakened alongside semis, amplifying the profit-taking impulse.

Memory Rout and Oil Spike Hit Chip Complex The immediate trigger came from Asia. South Korean brokerage KIS published a Q2 2026 profit estimate for SK Hynix that landed 8% below consensus, citing slow HBM4 shipments and heavy reliance on high-bandwidth memory. SK Hynix shares fell 15% on the Korean exchange, dragging Samsung and the KOSPI, which slid 9% and triggered a brief trading halt.

The read-through was swift. Applied Materials, which counts SK Hynix as a key HBM and DRAM equipment customer, absorbed the biggest hit in the group. NVIDIA (NASDAQ:NVDA) stock and Broadcom (NASDAQ:AVGO) stock each declined 2% as memory-cycle worries rippled across the AI hardware complex.

Adding to the pressure, renewed U.S.-Iran fighting over the Strait of Hormuz sent crude sharply higher. WTI crude oil is up 3.64% over the past 24 hours to $74.01 a barrel, which is a concern as rising energy costs pressure semiconductor margins and stoke broader macro risk-off flows.

Sector Proxy and Equipment Names Under Pressure The iShares Semiconductor ETF (NASDAQ:SOXX) is down 4% to $555.93, mirroring the sector drawdown. The fund is concentrated in the exact names caught in today’s selloff, so its beta to memory and AI-hardware sentiment is elevated. It does not use leverage, but concentration risk is meaningful.

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Lam Research (NASDAQ:LRCX) stock, another equipment maker with heavy memory exposure, is down 5% to $332.95. Lam’s South Korea revenue of $1.34 billion underscores the direct SK Hynix read-through for the picks-and-shovels equipment group.

Bull and Bear Case on Intel For Intel as the primary mover, the bull case rests on an AI-driven chip cycle that has already delivered. Intel’s Q1 2026 revenue rose 7% year over year (YoY) to $13.58 billion, and the Data Center and AI segment grew 22% YoY under CEO Lip-Bu Tan. Polymarket contracts assign a 67% probability to Intel topping its next quarterly report.

The bear case is what Monday is pricing in. Memory-cycle risk flagged by the SK Hynix estimate, oil-driven macro pressure, and rich valuations after Intel’s 361% one-year gain all argue for caution. Investors should consider keeping their position sizes modest given the daily volatility on names that have tripled or more from year-ago levels.

What to Watch Watch for whether WTI crude oil stabilizes below $75 and whether SK Hynix finds a floor overnight in Seoul. Any further escalation around the Strait of Hormuz could keep the risk premium in oil elevated, extending pressure on the chip complex.

The next catalyst is earnings. Intel’s Q2 2026 earnings report is due later this month, and Polymarket contracts on the release expire July 23. That report may reset the memory-versus-AI-compute debate for the whole group, and investors can watch it closely for margin and Data Center guidance.

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NewPeak Metals Ltd (ASX:NPM, OTC:NPMFF, FRA:NPM) earlier this week confirmed a large-scale gold-zinc-silver discovery from the first hole of its 2026 drilling program at the company’s 100%-owned Las Opeñas Gold Project in San Juan Province, Argentina.

Shares in the company surged in morning trade following the announcement, rising as high as A$0.031, representing an intraday gain of about 107% from the previous close of A$0.015.

Managing director Mark Purcell told Proactive that discovery hole 26-LODH-023 returned mineralisation across the full 663-metre hole at 0.41 grams per tonne gold equivalent. The result included 0.16 grams per tonne gold, 0.65% zinc and 4.53 grams per tonne silver from surface to end of hole.

Purcell said the first result from the six-hole program represented a strong start for NewPeak Metals. “We’ve put out our first hole of six holes this morning, and it’s showing 663m, the entire hole from surface at 0.41g gold equivalent,” he said.

He also pointed to a 282-metre interval from seven metres at 0.65 grams per tonne gold equivalent, describing the broader result as a “fantastic start” while the company awaited assays from the remaining five holes.

The key near-term catalyst for NewPeak Metals is the release of those outstanding assays, which Purcell said should be announced over the next three to six weeks. These results are expected to help the company assess the broader potential of the Las Opeñas system and inform the next stage of work.

Purcell said NewPeak Metals had been targeting a gold-dominant bulk-tonnage opportunity, while the presence of silver and zinc as potential by-products added further interest. He said the US viewed supply chains for both silver and zinc as vulnerable to its supply needs, making their presence in the system notable.

Looking ahead, Purcell said the company hoped to move toward declaring a resource at Las Opeñas as soon as possible, subject to the remaining assays. “We would love to get out there and declare a resource as soon as possible on Las Opeñas,” he said.

With five additional holes still to be reported, the coming weeks could provide important evidence on the scale and continuity of mineralisation at Las Opeñas following the discovery hole.

Interview highlights NewPeak Metals Ltd (ASX:NPM, OTC:NPMFF) confirmed a large-scale gold-zinc-silver discovery from the first hole of its 2026 drilling program at the 100%-owned Las Opeñas Gold Project in San Juan Province, Argentina. Discovery hole 26-LODH-023 returned mineralisation across the full 663-metre hole at 0.41 grams per tonne gold equivalent. The full-hole result included 0.16 grams per tonne gold, 0.65% zinc and 4.53 grams per tonne silver from surface to end of hole. Shares in NewPeak Metals surged as high as A$0.031 in morning trade, representing an intraday gain of about 107% from the previous close of A$0.015. Managing director Mark Purcell described the result as a “fantastic start”. Purcell said NewPeak Metals had been targeting a gold-dominant bulk-tonnage opportunity. Silver and zinc were highlighted as potential by-products, with Purcell noting their relevance to US critical mineral supply chains. Assays from the remaining five holes are expected in the next three to six weeks. Purcell said NewPeak Metals would like to move toward declaring a resource at Las Opeñas as soon as possible, depending on the remaining assays.

Proactive: NewPeak Metals Ltd (ASX:NPM, OTC:NPMFF) has delivered assay results from the first drill hole of its 2026 drill program at the 100%-owned Las Opeñas Gold Project. Here to discuss the results is managing director Mark Purcell. Mark, good to see you again.

Mark Purcell: Jonathan, great to be here.

Proactive: Good to have you. So let’s talk about these results. Talk us through the results and the scale of that intercept.

Mark Purcell: Absolutely. So we’ve put out our first hole of six holes this morning, and it’s showing 663 metres, the entire hole from surface, at 0.41 grams per tonne gold equivalent. Even within that, there’s a 282-metre interval from only seven metres at 0.65 grams per tonne gold equivalent. So fantastic start for us and crossing our fingers for the remaining five holes.

Proactive: Well, that’s the thing. It’s a great start, but there are more assays pending. What do you hope to see through those?

Mark Purcell: Similarly, we were always targeting a bulk-tonnage target, gold dominant. But to have silver and zinc sitting there as potential by-products as well is just fantastic.

Proactive: So let’s talk about silver and zinc. It’s on the US critical minerals list. Why are these metals so important?

Mark Purcell: I think for both of them, the US sees the supply chain as being particularly vulnerable to its supply needs. And for us to have those two sitting there as a by-product is fantastic.

Proactive: And being on that list, surely there’s support out there as well. We’ve got more assays coming, but what can we see next for the company over the next couple of months?

Mark Purcell: So we’ve got the assays remaining. They should be announced in the next three to six weeks. We’re also going to, depending on the assays, push forward with the resource. So we would love to get that done quickly if we can. And beyond that, grow the company for other opportunities and take it forward.

Proactive: Mark, plenty to look forward to. Thanks for your time this morning and we’ll speak again shortly.

Mark Purcell: Thanks, Jonathan. Appreciate it.

Proactive: Mark, assays to come, we know that, but what else can we expect over the next couple of months?

Mark Purcell: For the next three to six weeks, as you mentioned, the remaining five-hole assays will come. I think one of the biggest things we’re looking forward to is pinning those assay results. We would love to get out there and declare a resource as soon as possible on Las Opeñas.

Proactive: So plenty to look forward to in Argentina and for NewPeak Metals on the whole. Mark, we look forward to speaking with you again and thanks for your time this morning.

Mark Purcell: Likewise. Thanks, Jonathan. Cheers.

Applied Materials Inc. shares AMAT climbed nearly 7% on Thursday as semiconductor stocks rallied after reports that Meta Platforms plans to begin manufacturing its in-house artificial intelligence chip in September, boosting optimism around demand for wafer fabrication equipment and AI infrastructure.

The broader semiconductor rally also lifted Lam Research and KLA Corp., while optical networking company Lumentum led gains in the S&P 500.

Applied Materials gained nearly 7%, while Lam Research and KLA rose more than 6% as investors reacted to reports that Meta expects to begin work on its AI data-center chip, codenamed "Iris," using custom-built silicon. Reuters first reported the development.

The move was viewed as a positive development for companies supplying wafer fabrication equipment used to convert raw silicon wafers into microchips.

The rally comes as expectations continue to build around rising capital expenditure by hyperscale technology companies.

According to Citi, the wafer fabrication equipment market is expected to grow from about $145 billion this year to $200 billion in 2027 and $250 billion in 2028.

The brokerage also forecasts hyperscaler spending to increase 84% this year, 56% in 2027 and 38% in 2028.

Amazon, Microsoft, Alphabet, Meta Platforms and Oracle are expected to spend more than $1.1 trillion in 2027, up from $650 billion this year.

Brokerages also turned more optimistic on semiconductor equipment makers.

Mizuho Securities raised its price target on Applied Materials to $650 from $540 while maintaining its Outperform rating. It also increased its target on Lam Research to $400 from $380.

TD Cowen lifted its price target on Applied Materials to $700 from $525 while maintaining its rating on the stock.

The brokerage models wafer fabrication equipment spending reaching $250 billion in 2028 and potentially $400 billion by 2030, supported by stronger industry profitability and demand backed by take-or-pay agreements.

Under its $250 billion scenario, TD Cowen estimates Applied Materials could generate earnings of about $25 per share, compared with its calendar 2026 estimate of $13.35.

Lam Research could earn between $11 and $12 per share, while KLA could generate $9 to $10 per share.

The firm said Applied Materials would be the biggest beneficiary under that scenario, followed by KLA because of their exposure to leading-edge semiconductor manufacturing and DRAM investment.

Investor sentiment also received support from comments by Applied Materials CEO Gary Dickerson.

In an interview with Nikkei Asia, Dickerson said Applied Materials has “tremendous visibility” into customer demand over the next 24 months.

He added that chipmakers are providing equipment demand forecasts at least two years in advance, giving the company confidence that the AI-driven semiconductor investment cycle still has years to run.

AMAT Technicals Applied Materials continues to trade above its 20-day, 50-day and 200-day simple moving averages.

Its relative strength index stands at 53.70, a neutral reading, while traders are watching the 20-day moving average near $503 as the first support level and the 52-week high near $739.67 as the next major resistance.

Micron Technology Inc (NASDAQ:MU) shares rose 7% on Thursday after the company announced plans to invest up to $3 billion to strengthen the U.S. semiconductor supply chain and support future manufacturing capacity.

The investment includes $500 million in strategic financing support for GlobalWafers to advance development of its GlobalWafers America 300mm raw silicon wafer manufacturing facility in Sherman, Texas.

The companies also plan to enter into a 10-year supply agreement that would provide Micron with access to additional raw silicon wafer capacity.

Micron said the investment is intended to improve supply assurance, increase long-term planning flexibility and support demand for advanced memory and storage solutions driven by artificial intelligence and other data-intensive applications.

“Securing a reliable supply of critical input materials is essential to supporting Micron’s long-term growth and technology roadmap,” Ben Tessone, senior vice president and chief procurement officer at Micron, said in a statement.

GlobalWafers CEO Doris Hsu added that the partnership with Micron would support the expansion of local semiconductor manufacturing capabilities and strengthen supply chain resilience in the US.

Micron and GlobalWafers also plan to explore collaboration on next-generation wafer technologies and process innovations.

The proposed transaction remains subject to definitive agreements, customary approvals and closing conditions.

The news also lifted shares across the broader semiconductor sector, with Advanced Micro Devices Inc (NASDAQ:AMD, XETRA:AMD) gaining 7%, Qualcomm Inc (NASDAQ:QCOM, XETRA:QCI) rising 4%, Taiwan Semiconductor Manufacturing Co (ADR) (NYSE:TSM) advancing 3%, Broadcom Inc (NASDAQ:AVGO, XETRA:1YD) up 2% and Applied Materials Inc (NASDAQ:AMAT, XETRA:AP2) climbing 6%.

9.7.2026 15:52, MSFT, IBM, MU, SBUX, PEP, META, PSKY, HY9H

Index Dow Jones -0,12 % na 52286,93 b., S&P 500 +0,32 % na 7506,42 b., Nasdaq Composite +0,53 % na 26008,92 b.

Technologické akcie dnes táhnou index S&P 500 nahoru, podpořeny silnou poptávkou po americkém IPO jihokorejského výrobce paměťových čipů SK Hynix. Nabídka je podle lidí obeznámených s danou záležitostí více než sedmkrát přepsána. Cena emise byla stanovena na 149 USD za jeden americký depozitní certifikát, přičemž akcie se mají začít obchodovat na burze v pátek.

Micron (+7,2 %) oznámil urychlení plánovaných investic do amerických výrobních závodů a technologií. Celkové výdaje by měly do roku 2035 přesáhnout 250 mld. USD, oproti původně plánovaným 200 mld. USD. Cílem je vyrábět 40 % veškeré paměti DRAM v USA, přičemž první výstup z výrobní linky v Idahu se očekává v polovině roku 2027.

Naopak akcie Paramount Skydance klesají 7,8 % poté, co analytická společnost Arete Research snížila své doporučení na „prodat" a stanovila nejnižší cílovou cenu na trhu. Důvodem je obava z vysokého zadlužení, které by společnosti přinesla případná fúze s Warner Bros. Discovery.

Akcie IBM a Microsoftu také oslabují poté, co Bloomberg News informoval, že Starbucks vyvíjí vlastní interní nástroje s pomocí umělé inteligence, které by mohly nahradit software nakupovaný od těchto společností. Řetězec káváren buduje alternativy k systému Microsoftu pro sledování zásob a nástroji IBM pro správu údržby. Část nového softwaru by mohla být nasazena do konce příštího roku, pokud projde testováním.

Výrobce nápojů a potravin PepsiCo (-4,8 %) zveřejnil výsledky hospodaření za druhé čtvrtletí roku fiskálního roku 2026. Organické tržby vzrostly o 2,4 %, čímž mírně zaostaly za odhadem analytiků, přičemž segment potravin v Severní Americe organicky klesl o 2 %. Tržby a jádrový zisk na akcii odhady mírně překonaly a společnost potvrdila celoroční výhled organického růstu tržeb.

Společnost Meta Platforms (-2,7 %) plánuje od září zahájit výrobu vlastního AI čipu, a to jako součást plánu na navýšení celkové výpočetní kapacity na 14 gigawattů v příštím roce. Vyplývá to z interního mema, které měla agentura Reuters k dispozici.

Index S&P 500 +0,32 % na 7506,42 b. Nejsilnější sektory S&P Změna Nejslabší sektory S&P Změna Informační technologie +1,5 % Nezbytná spotřeba -1,8 % Průmysl +0,9 % Komunikační služby -1,5 % Utility +0,2 % Zbytná spotřeba -0,7 % Nejsilnější akcie S&P Změna Nejslabší akcie S&P Změna Lam Research Corp (LRCX) +11 % Paramount Skydance Corp (PSKY) -7,8 % Lumentum Holdings (LITE) +10,0 % PepsiCo (PEP) -4,8 % Applied Materials (AMAT) +9,6 % FactSet Research Systems (FDS) -4,4 % KLA Corp (KLAC) +9,4 % Palantir Technologies (PLTR) -4,0 % Ciena Corp (CIEN) +8,6 % Gartner (IT) -3,8 % Zdroj: Bloomberg

Michal Šnobl
Fio banka, a.s.
Prohlášení

Key Takeaways Applied Materials expects advanced packaging revenues to grow more than 50% in calendar 2026.AI demand and supply-constrained data center memory give AMAT an edge through 2026 and 2027.The NEXX acquisition and EPIC Center collaboration strengthen Applied Materials' packaging strategy. Applied Materials’ (AMAT - Free Report) advanced packaging has emerged as a major growth engine as the rapid build-out of AI computing infrastructure increases the need for higher system performance, power efficiency and cost optimization. In the advanced packaging space, AMAT has strong positions in high-bandwidth memory and 3D chiplet stacking. The company is well-positioned for upcoming packaging inflections.

AMAT is expected to gain tremendously as the data center memory space remains among the most supply-constrained markets amid the massive demand. The eventual ramp-up of memory chip production gives AMAT an edge throughout 2026 and 2027 as it is one of the leading process equipment suppliers in advanced packaging. The company expects its packaging revenues to grow more than 50% in 2026.

Applied Materials’ advanced packaging, alongside leading-edge foundry-logic and DRAM, are one of the three markets with the greatest impact on AI computing. Together, these areas are expected to account for more than 80% of year-over-year wafer fab equipment spending growth in 2026, with a similar profile expected in 2027.

AMAT already offers what it describes as the industry’s broadest portfolio for the emerging panel trend, spanning chemical vapor deposition, etch, physical vapor deposition, digital lithography, electrochemical deposition, and e-beam metrology and test. Now it plans to strengthen this portfolio through its acquisition of the NEXX business from ASMPT.

The combined portfolio of NEXX and AMAT is designed to help chipmakers and systems companies build larger AI accelerators with higher energy-efficient performance.  Collaboration is another important element of Applied Materials’ packaging strategy. Through the EPIC Center, AMAT and SK hynix plan to work on next-generation DRAM, HBM and 3D advanced packaging. These factors establish AMAT at a sweet spot in the packaging business.

How Competitors Fare Against AMATAMAT’s broad portfolio positions the company to capture a larger share of customer spending as semiconductor manufacturing becomes increasingly materials-intensive while also keeping its competitors like Lam Research (LRCX - Free Report) and Camtek (CAMT - Free Report) at bay. The breadth of Applied Materials' portfolio also reduces its dependence on any single semiconductor technology cycle and supports stronger pricing power.

Camtek focuses on semiconductor inspection, metrology, advanced packaging and high-performance computing applications. Lam Research competes with Applied Materials across deposition and etch technologies, including advanced atomic layer deposition systems used in leading-edge semiconductor manufacturing.

AMAT’s Price Performance, Valuation and EstimatesShares of Applied Materials have surged 115.7% year to date compared with the Zacks Electronics - Semiconductors industry’s growth of 40.4%.

AMAT YTD Performance Chart
Image Source: Zacks Investment Research

From a valuation standpoint, Applied Materials trades at a forward price-to-sales ratio of 11.26X, higher than the industry’s average of 8.77X.

AMAT Forward 12-Month (P/S) Valuation Chart
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 and 2027 earnings implies year-over-year growth of 28% and 32%, respectively. The estimates for fiscal 2026 have been revised upward over the past 30 days.

Image Source: Zacks Investment Research

Applied Materials currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Intel (NASDAQ:INTC | INTC Price Prediction) are down 10% in Tuesday morning trading to $110, while Advanced Micro Devices (NASDAQ:AMD) stock is off 8% to $508. The moves cap a sharp reversal after both names rallied Monday.

The declines are part of a broader chip selloff triggered by Samsung Electronics’ quarterly report. Equipment maker Applied Materials (NASDAQ:AMAT) stock is leading the group lower, down 10% to $532, and the iShares Semiconductor ETF (NASDAQ:SOXX) is off 6% to $544.

Samsung’s Record Beat Sparks a Sector Reset Samsung Electronics reported preliminary Q2 2026 operating profit of about $58 billion, a 19-fold jump from a year earlier that beat analyst estimates. Yet, Samsung shares fell 7%, and as much as 10% intraday in Seoul, on profit-taking after a 150% run this year, with Deutsche Bank flagging that the results were “only” 6% ahead of estimates.

That reaction bled into Intel, AMD, and Applied Materials during the U.S. session. The concern is whether these semiconductor and AI-adjacent companies can sustain the elevated sales and margins the market has already priced in.

Intel stock had gained on Monday on continued momentum from an extended Apple (NASDAQ:AAPL) partnership and a broad chip rebound, closing at $122.20. AMD stock closed Monday at $552.05 before today’s reversal. Both names have staged enormous 2026 runs into today’s session.

Why Applied Materials Stock Fell Fast Applied Materials is bearing the brunt of the selloff because its major customers include Samsung, SK Hynix, Micron, and Intel. That customer mix leaves the equipment maker highly exposed to memory and AI capex sentiment, so Applied Materials shares tend to sell off rapidly when investors question the durability of that spending cycle.

Applied Materials stock had also climbed sharply into the report, with shares more than doubling in 2026 heading into today. CEO Gary Dickerson raised the full-year outlook in May and guided the semiconductor equipment business to grow more than 30% in calendar 2026, which sets a high bar for follow-through in coming quarters.

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Broader Market Isn’t Collapsing This is a chip-specific reset, not a market-wide risk-off day. The Dow closed at a record on Monday, and the CBOE Volatility Index sat at 15.81 on July 3, in the complacency range and down 14% over the prior week. The iShares Semiconductor ETF offer a diversified basket of chip stocks, though sector ETFs and individual chip names remain volatile, high-beta vehicles.

The bull case is still intact. Samsung’s profit was a record beat, high-bandwidth memory supply constraints are seen persisting well into 2027, and analysts last week framed the pullback as a “healthy reset” in an AI/semiconductor upcycle. The bear side notes that valuations are stretched after huge 2026 gains and that the AI trade is under fresh bubble scrutiny. AMD stock carries a P/E ratio of 208x, leaving little room for disappointment.

What to Watch Traders can watch for whether Intel and AMD stabilize into the close and whether Applied Materials stock finds a bid as investors digest the capex read-through. The key question is whether Samsung’s profit-taking reaction marks a one-day reset or the start of a broader rethink of AI infrastructure valuations.

The takeaway: today’s move looks like a valuation check rather than a fundamental break. Samsung’s record beat confirms the memory and AI capex cycle is still working, but stretched multiples mean even good news can trigger sharp pullbacks. Watch how Applied Materials trades as the clearest read on capex sentiment, and how Intel and AMD hold up relative to their 2026 breakout levels.

Given how high-beta these names have become, investors should consider keeping position sizes modest through the volatility and wait for stabilization before considering adding exposure to the group.

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Contact [email protected] for any questions or corrections.

Applied Materials (AMAT - Free Report) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.

Over the past month, shares of this maker of chipmaking equipment have returned +33.1%, compared to the Zacks S&P 500 composite's -0.9% change. During this period, the Zacks Electronics - Semiconductors industry, which Applied Materials falls in, has lost 16.1%. The key question now is: What could be the stock's future direction?

While media releases or rumors about a substantial change in a company's business prospects usually make its stock 'trending' and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.

Earnings Estimate RevisionsRather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.

Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.

Applied Materials is expected to post earnings of $3.35 per share for the current quarter, representing a year-over-year change of +35.1%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

The consensus earnings estimate of $12.11 for the current fiscal year indicates a year-over-year change of +28.6%. This estimate has changed +0.7% over the last 30 days.

For the next fiscal year, the consensus earnings estimate of $15.98 indicates a change of +32% from what Applied Materials is expected to report a year ago. Over the past month, the estimate has changed +1.4%.

Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Applied Materials is rated Zacks Rank #2 (Buy).

The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:

12 Month EPS

Projected Revenue GrowthWhile earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.

For Applied Materials, the consensus sales estimate for the current quarter of $8.98 billion indicates a year-over-year change of +23%. For the current and next fiscal years, $33.29 billion and $41.76 billion estimates indicate +17.3% and +25.5% changes, respectively.

Last Reported Results and Surprise HistoryApplied Materials reported revenues of $7.91 billion in the last reported quarter, representing a year-over-year change of +11.4%. EPS of $2.86 for the same period compares with $2.39 a year ago.

Compared to the Zacks Consensus Estimate of $7.69 billion, the reported revenues represent a surprise of +2.82%. The EPS surprise was +6.72%.

The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates each time over this period.

ValuationNo investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.

Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.

The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an A is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.

Applied Materials is graded D on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.

Bottom LineThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Applied Materials. However, its Zacks Rank #2 does suggest that it may outperform the broader market in the near term.

Applied Materials (AMAT) is becoming one of the biggest beneficiaries of the AI semiconductor buildout, supplying the advanced manufacturing equipment needed to produce next-generation chips. In this Tech Corner, George Tsilis breaks down how Applied Materials is capitalizing on surging demand for advanced packaging, DRAM, and leading-edge foundry technologies, along with the record earnings and raised outlook fueling the stock's rally.

The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price. Do they really matter, though?

Let's take a look at what these Wall Street heavyweights have to say about Applied Materials (AMAT - Free Report) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.

Applied Materials currently has an average brokerage recommendation (ABR) of 1.45, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 38 brokerage firms. An ABR of 1.45 approximates between Strong Buy and Buy.

Of the 38 recommendations that derive the current ABR, 28 are Strong Buy and three are Buy. Strong Buy and Buy respectively account for 73.7% and 7.9% of all recommendations.

Brokerage Recommendation Trends for AMAT

Check price target & stock forecast for Applied Materials here>>>

The ABR suggests buying Applied Materials, but making an investment decision solely on the basis of this information might not be a good idea. According to several studies, brokerage recommendations have little to no success guiding investors to choose stocks with the most potential for price appreciation.

Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation.

This means that the interests of these institutions are not always aligned with those of retail investors, giving little insight into the direction of a stock's future price movement. It would therefore be best to use this information to validate your own analysis or a tool that has proven to be highly effective at predicting stock price movements.

Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock's price performance in the near future. Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision.

ABR Should Not Be Confused With Zacks RankAlthough both Zacks Rank and ABR are displayed in a range of 1--5, they are different measures altogether.

Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.

It has been and continues to be the case that analysts employed by brokerage firms are overly optimistic with their recommendations. Because of their employers' vested interests, these analysts issue more favorable ratings than their research would support, misguiding investors far more often than helping them.

In contrast, the Zacks Rank is driven by earnings estimate revisions. And near-term stock price movements are strongly correlated with trends in earnings estimate revisions, according to empirical research.

In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks.

There is also a key difference between the ABR and Zacks Rank when it comes to freshness. When you look at the ABR, it may not be up-to-date. Nonetheless, since brokerage analysts constantly revise their earnings estimates to reflect changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in predicting future stock prices.

Should You Invest in AMAT?Looking at the earnings estimate revisions for Applied Materials, the Zacks Consensus Estimate for the current year has increased 0.7% over the past month to $12.11.

Analysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term.

The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #1 (Strong Buy) for Applied Materials. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Therefore, the Buy-equivalent ABR for Applied Materials may serve as a useful guide for investors.

Applied Materials, Inc. (AMAT) Discusses DRAM and Advanced Packaging Innovations for AI-Driven Semiconductor Growth Prepared Remarks Transcript

Here are three stocks with buy rank and strong momentum characteristics for investors to consider today, July 2:

Rockwell Automation, Inc. (ROK - Free Report) : This industrial automation company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 6.9% over the last 60 days.

Rockwell Automation's shares gained 32.7% over the last three months compared with the S&P 500’s decline of 14.0%. The company possesses a Momentum Score of A.

Applied Materials, Inc. (AMAT - Free Report) : This semiconductor equipment company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 9% over the last 60 days.

Applied Materials’ shares gained 87.0% over the last three months compared with the S&P 500’s decline of 14.0%. The company possesses a Momentum Score of A.

Concrete Pumping Holdings, Inc. (BBCP - Free Report) : This concrete pumping and waste management company has a Zacks Rank #1 and witnessed the Zacks Consensus Estimate for its current year earnings increasing 41.7% over the last 60 days.

Concrete Pumping Holdings ’ shares gained 69.8% over the last three months compared with the S&P 500’s decline of 14.0%. The company possesses a Momentum Score of B.

See the full list of top ranked stocks here

Learn more about the Momentum score and how it is calculated here.

Applied Materials (AMAT - Free Report) closed at $650.91 in the latest trading session, marking a -9.97% move from the prior day. The stock fell short of the S&P 500, which registered a loss of 0.22% for the day. Elsewhere, the Dow lost 0.03%, while the tech-heavy Nasdaq lost 0.66%.

The stock of maker of chipmaking equipment has risen by 47.54% in the past month, leading the Computer and Technology sector's loss of 2.58% and the S&P 500's loss of 1.21%.

The investment community will be closely monitoring the performance of Applied Materials in its forthcoming earnings report. The company is scheduled to release its earnings on August 13, 2026. It is anticipated that the company will report an EPS of $3.35, marking a 35.08% rise compared to the same quarter of the previous year. Meanwhile, our latest consensus estimate is calling for revenue of $8.98 billion, up 23% from the prior-year quarter.

Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $12.11 per share and revenue of $33.29 billion. These totals would mark changes of +28.56% and +17.34%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for Applied Materials. Recent revisions tend to reflect the latest near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the business and profitability.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.71% higher. Currently, Applied Materials is carrying a Zacks Rank of #2 (Buy).

Looking at valuation, Applied Materials is presently trading at a Forward P/E ratio of 59.72. This represents no noticeable deviation compared to its industry average Forward P/E of 59.72.

One should further note that AMAT currently holds a PEG ratio of 2.01. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. As the market closed yesterday, the Electronics - Semiconductors industry was having an average PEG ratio of 2.2.

The Electronics - Semiconductors industry is part of the Computer and Technology sector. Currently, this industry holds a Zacks Industry Rank of 56, positioning it in the top 23% of all 250+ industries.

The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Ensure to harness Zacks.com to stay updated with all these stock-shifting metrics, among others, in the next trading sessions.

The Nasdaq Composite (^IXIC +1.36%) index rose 1.1% by noon ET Tuesday as semiconductor stocks surged, lifting the broader market on the final trading day of June. The S&P 500 (^GSPC +0.76%) gained 0.6%, while the Dow Jones Industrial Average (^DJI +0.27%) added a modest 0.2%.

Chip stocks dominated the session, with the iShares Semiconductor ETF (SOXX +4.13%) climbing 3.6%. The Silicon Valley surge was broad rather than concentrated in a single name. Apple (AAPL +2.04%) led the S&P 500 and Nasdaq Composite higher, adding $110 billion in market capitalization on a fairly modest 2.6% gain.

^IXIC data by YCharts

The Dow's sluggish performance tells a misleading story, though. Honeywell International (HON 2.30%) dropped 8.1% after completing its aerospace spinoff on Monday. This mechanical adjustment subtracted 121 points from the index. That's not a vote of no confidence; it's just math reflecting a significant business unit becoming a separate stock.

Behind the rally: AI hype, SpaceX news, and Supreme Court drama The semiconductor sector's strength reflected continued optimism around artificial intelligence (AI) infrastructure spending. Bullish analyst notes lifted chip equipment giant Applied Materials (AMAT +6.19%) by 5% and industry veteran Intel (INTC +6.99%) by 7%, respectively. These upgrades boosted the chip sector as a whole, with significant upside for the major market indexes, too.

Space Exploration Technologies (SPCX +3.52%) jumped 4.1% on reports that the company is in talks to donate equity to Trump Accounts, a government-backed children's investment program set to launch next week. More than 6 million kids have already signed up for this children's investment program, with asset contributions from prominent figures including Michael Dell.

The Fidelity Nasdaq Composite Index ETF (ONEQ +1.31%) reflects the Nasdaq Composite index. It tracks everything on the Nasdaq exchange, SpaceX included. The popular Invesco QQQ Trust (QQQ +1.69%) tracks the Nasdaq-100 index instead. That's a more exclusive club with about 100 components instead of thousands, and it hasn't added Elon Musk's rocket company yet.

Image source: The Motley Fool.

Tuesday's 4% SpaceX gain narrowed the gap between ONEQ and QQQ, though QQQ's heavy mega-cap weighting still gave it a slight edge -- it gained 1.5% versus ONEQ's 1.1%.

Over in the Strait of Hormuz, 485 ships are stuck waiting to pass through, including 220 oil tankers. Actual shipping traffic remains minimal. The United States Oil Fund (USO 1.47%) dropped 1% anyway, suggesting traders are growing numb to the ongoing standoff. U.S. and Iranian negotiators continue talking in Qatar, exchanging messages through lower-level government representatives.

And the Supreme Court is ending its session with a bunch of important rulings. The big ones today involved upholding birthright citizenship and looser limits on the parties' political spending. Wall Street appreciated the rulings, with notable index gains seen around each announcement.

Today's Change

(

1.36

%) $

351.96

Current Price

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26172.10

What comes next And just like that, the first half of 2026 is in the books. Tech stocks are ending June on a high note, though the Nasdaq's path here involved plenty of drama.

Typical quarter-end dynamics likely contributed to Tuesday's moves, as institutional investors rebalanced portfolios and engaged in window dressing ahead of their mid-year reports. It's the financial equivalent of cleaning your apartment right before guests arrive. The buying is real, but the motivation is partly cosmetic.

For long-term investors, Tuesday's chip-driven rally reinforces the market's continued focus on AI-related infrastructure spending. Whether current valuations prove justified in the long run depends on how effectively that spending translates into corporate earnings growth.

Anders Bylund has positions in Intel. The Motley Fool has positions in and recommends Apple, Applied Materials, Honeywell Technologies, Intel, and iShares Semiconductor ETF. The Motley Fool has a disclosure policy.