Applied Materials Trades at Record Levels Lifted by Bullish Outlook for Semiconductor Industry

By Maria Armental

Applied Materials Inc. is trading at record levels following strong performance in the latest quarter, including record quarterly revenue, and bullish commentary on the semiconductor industry.

Shares, which traded as high as $124.50 on Friday, recently traded at $122.06, up nearly 8% for the day and on track for a record closing.

The chip-making equipment manufacturer has benefited by the digital acceleration during the coronavirus pandemic, and company officials said they see ample room for growth, including in rebounding specialty markets like automotive.

For example, Chief Executive Gary Dickerson said in the company's earnings call, automotive, "where there are known supply shortfalls, total semi consumption is expected to expand more than 15% this year translating these factors to industry investments."

Company officials pointed to chip manufacturing equipment spending this year topping $70 billion.

"This is going to be a decade-plus investment cycle," Chief Financial Officer Dan Durn said in the call. "Semiconductors are going to be on the key path of enabling some pretty major trends that play out around the world."

"We believe the continued evolution of devices that require new architectures and structures all play into Applied's 'sweet spot' where it possesses the broadest coverage of key process areas," Stifel analysts Patrick J. Ho, Brian Chin and Nicolas E. Doyle wrote. "Moreover, the company is benefiting from emerging trends in the advanced packaging market, where it is positioned in areas, like etch, deposition, and planarization, where these processes are increasing in intensity trends."

Stifel's target price on Applied's stock is $140.

Among the analysts that raised price targets were Mizuho Securities USA LLC, which raised it to $130 from $96 pointing to Applied's "strong strategic value proposition with share gains," and JPMorgan, which raised it to $146 from $88.

Write to Maria Armental at [e-mail]

(END) Dow Jones Newswires

February 19, 2021 12:14 ET (17:14 GMT)

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