Applied Materials stock doubles as chip-equipment demand surges

Key takeaway

• Applied Materials, which designs equipment that chipmakers use to produce chips, has doubled in stock price year to date as demand surges from the AI boom.

• The company expects at least 30% revenue growth for its semiconductor business in calendar 2026, driven by major partnerships, though its valuation is now stretched at a P/E ratio above 50.

• Whether the stock remains attractive depends on whether Applied Materials can deliver the 40% to 50% quarterly growth needed to justify that valuation.

3 Key Points

FAQ

What does Applied Materials actually make?

Applied Materials does not make chips itself. Instead, it designs and produces vital equipment that chipmakers use to create their chips, making it an enabler for semiconductor manufacturers.

How much revenue growth is the company expecting?

Applied Materials expects at least 30% revenue growth for its semiconductor business in calendar 2026, a substantial increase from the 10.4% year-over-year growth it achieved in its fiscal 2026 second quarter.

Why has the stock price risen so much?

The stock has more than doubled year to date, reflecting investor confidence in accelerated revenue growth driven by partnerships with major chipmakers and the broader AI infrastructure boom that is fueling demand for chip production equipment.