Applied Materials Investor Day: Semi Is A Growth Industry, Stupid

Applied Materials (AMAT) hosted its investor day this week and updated its EPS target in FY'24 to $8.50. The company highlighted many semiconductor manufacturing breakthroughs, such as gate-all-around (GAA) and 3D DRAM, powered by AMAT's technologies. They also articulated their plan of moving to a subscription business model through Applied Global Services.  However, what really caught our eye is AMAT's outlook on the semiconductor industry. The management believes that we are entering an infection point where the exponential growth of data requires the help of "AI workloads." The new semi solutions designed for AI workloads could double the total TAM of the semiconductor sector by 2030. AMAT CFO emphasized that investors would better perceive semi as a growth industry rather than a cyclical one.

• "What you see is each era adds more than twice as much semiconductor demand as the previous one. I believe AI is going to be, by far, the biggest wave yet. As an industry, we have line of sight to $1 trillion market in the next decade." - Gary E. Dickerson, CEO of AMAT 
• "Investors wrote off the industry between 2000 and 2013. Others used it as a trading vehicle. And today, many investors are still not ready to trust that this is a growth industry. I believe the semiconductor market will keep growing at a healthy pace. Not every year will be a new record, but I believe there will be higher highs and higher lows, we will deliver growth." - Daniel J. Durn, CFO of AMAT

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