Applied Materials Stock Wil Ride "Structural Tailwinds" Amid Asia Unrest, This Bullish Analyst Says

Mizuho analyst Vijay Rakesh reiterated Buy on Applied Materials, Inc AMAT with a price target of $150. Rakesh hosted AMAT's CFO Brice Hill and Raman Achutharaman, Head of Technology and Strategy (Semiconductor Products), at its 4th Annual Mizuho Storage & AI Virtual Series. 

Rakesh's key highlights included node transition driving ~20% higher capital intensity with ~$1 billion/100,000 incremental TAM for GAA driving 5-10 incremental process steps.

AMAT noted an increase in process steps involving GAA, potentially driving an incremental ~$1 billion revenue for every 100,000 wafers starting at ~3nm. 

Rakesh writes that AMAT is well - positioned for "the next frontier" in transistor to Nanosheets/ForFETs and BPSD wiring.

As transistors continue to shrink and new architectures are developed, challenges arise with power delivery and wiring resistance. 

New techniques to address include Buried Power Rail (BPR) and Back Side Power Distribution (BSPD) (AMAT noted its pure tungsten PVD could lower resistance 50-60%) to improve performance (stable power, lower resistance) and reduce surface area (increased transistor density).

The analyst emphasized AMAT's foundry/logic mix, ICAPS, >3 quarter backlog, buffers a potentially softer C23E WFE and could still deliver a strong top-line. 

Rakesh said he sees weakness in Memory WFE, though he believes it could be partially offset by continued strong foundry/logic and lagging edge ICAPS demand with its backlog >3 quarters.

While AMAT stock has corrected concerns of a softer C23E WFE and geopolitical risks, key inflections in process nodes, leading to potential share gains, could position AMAT well. 

Rakesh said that AMAT is a key semiconductor technology enabler with structural tailwinds. 

Price Action: AMAT shares traded lower by 0.79% at $90.51 on the last check Tuesday.

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