2024-04-09 02:00:32 ET
Summary
- Applied Materials stock has seen significant growth since the introduction of OpenAI's ChatGPT, riding the generative AI revolution.
- The company has significant long-term opportunities in AI, IoT, electric vehicles, and renewable energy.
- AMAT stock may be overvalued at its current price, with a high P/E ratio suggesting potential market overvaluation.
The semiconductor industry has boomed since the beginning of 2023, riding the tailwinds of OpenAI's introduction of ChatGPT to the market, which sparked the generative AI revolution. Applied Materials ( AMAT ) has ridden that wave higher; the stock was up 68% in 2023 and, as the following chart shows, was up 25.50% in 2024 as of April 4.
I last wrote about this stock on January 25, 2024, and recommended a buy. Since then, the stock has been up around 21% (As of April 5). The company reported its first quarter fiscal year ("FY") earnings on February 15, and investors liked what they saw. Applied Materials reported revenue that beat analysts' estimates by $220 million and non-GAAP earnings-per-share ("EPS") by $0.22. The company also issued guidance above analysts' expectations. The stock rose 6.3% after the company reported earnings. The best part was that Chief Executive Officer ("CEO") Gary Dickerson said the magic words that get investors excited: Artificial Intelligence ("AI"). He said during the company's earnings call , " The breadth of our technology capabilities, combined with our deep customer relationships, allows us to see inflections early and accelerate key technology innovations that are critical to scaling AI , IoT [Internet of Things], electric vehicles and renewable energy. "...
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Applied Materials Long-Term Opportunities Vs. Risks: Hold Rating Explained