{"id":36782,"date":"2023-11-23T17:52:35","date_gmt":"2023-11-23T17:52:35","guid":{"rendered":"https:\/\/microloannexus.com\/investing\/applied-materials-and-3-other-chip-equipment-stocks-for-a-new-ai-play\/"},"modified":"2023-11-23T17:52:37","modified_gmt":"2023-11-23T17:52:37","slug":"applied-materials-and-3-other-chip-equipment-stocks-for-a-new-ai-play","status":"publish","type":"post","link":"https:\/\/microloannexus.com\/?p=36782","title":{"rendered":"Applied Materials and 3 Other Chip Equipment Stocks for a New AI Play"},"content":{"rendered":"
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<\/p>\n

\n
<\/div>
\n

Applied Materials received an upgrade from Redburn Atlantic analyst Timm Schulze-Melander.<\/h4>\n


\n David Paul Morris\/Bloomberg
\n <\/span>
\n <\/figcaption><\/figure>\n<\/p><\/div>\n

One fact about the artificial intelligence trend is that running large language models and related inference software is going to be a boon for chip demand\u2014and that demand should trickle down to the semiconductor equipment industry. <\/p>\n

So at least in concept, if you like ChatGPT, you should be buying shares of Applied Materials.<\/p>\n

\n

That is the heart of the theory proffered Wednesday by Redburn Atlantic analyst Timm Schulze-Melander, who raised his ratings on both
\n Applied Materials
\n (ticker: AMAT) and
\n ASM International
\n (ASMIY) to Buy from Neutral. He also launched coverage of
\n Lam Research
\n (LRCX) with a Buy rating, and started
\n KLA
\n (KLAC) at Neutral. <\/p>\n

To be sure, chip makers have been slashing capacity near-term, which is never good for the equipment sector. And the analyst notes 2024 will be \u201ca year of semiconductor capacity digestion.\u201d But he expects the semi capital equipment sector to resume growth in 2025, driven in part by chip-demand tied to the accelerated rollout of AI applications.<\/p>\n

Schulze-Melander thinks the chip sector is likely to see one more round of consensus estimate cuts when it reports earnings early in 2024. And he notes chip makers will see improving results ahead of the equipment companies. <\/p>\n

His view is that \u201cinvestors will be quick to look through a challenging 2024 and focus instead on the growth opportunities in 2025 and beyond.\u201d<\/p>\n

The analyst sees multiple positive factors falling into place, although the picture is complex. The PC end market, he says, has troughed.<\/p>\n

He sees evidence of improvement in a recent rebound in spot prices for both NAND and DRAM memory chips, although he also notes that for now there remains substantial excess production capacity in the system. He sees PC units rebounding to 8% growth in 2024 from an estimated 11% decline this year.<\/p>\n

For mobile phones, he sees green shoots suggesting recovering demand, in particular in China. <\/p>\n

\u201cChina, the world\u2019s largest smartphone market, appears to have stabilized,\u201d he writes. \u201cSales of local brands are tracking more positively than expected such that suppliers are reporting rising demand across an increasing number of local handsets.\u201d <\/p>\n

He also sees a potential catalyst for the mobile phone segment in
\n Samsung\u2019s<\/span>
\n expected launch of the Galaxy S24 smartphone in January. Schulze-Melander projects global smartphone unit shipments to be up 4% next year, from a 5% decline this year.<\/p>\n

The data center chip market has been weak, he notes. But he adds that early signs of an investment cycle are emerging. Meanwhile, Schulze-Melander cautions that demand only now seems to be slowing for chips used in the automotive and internet of things sectors.<\/p>\n

For Applied Materials, his price target is $175\u2014the stock has recently been trading for about $150. He notes the company has \u201cthe broadest range of technology offerings into semiconductor manufacturing.\u201d<\/p>\n

For
\n ASM International,<\/span>
\n Schulze-Melander sets a price target of \u20ac545, about 100 euros above the current level. He says the company has a market-leading position in atomic layer deposition, an area he sees driven by new applications. <\/p>\n

Schulze-Melander sets a price target of $800 on
\n Lam Research,<\/span>
\n above Tuesday\u2019s close at $707. He notes Lam has \u201cpowerful market positions in two key etch processes; conductor and dielectric.\u201d The analyst sees Lam as a beneficiary from the chip industry\u2019s increased adoption of \u201cvertical scaling,\u201d or building chips in three dimensions, not just on a flat surface.<\/p>\n

For KLA, Schulze-Melander sets a price target of $550, a few dollars below the current level. While he says KLA is on a stable growth trajectory, he thinks the business is well understood by investors.<\/p>\n

Applied Materials, KLA, Lam, and ASM International all traded higher Wednesday.<\/p>\n

Write to Eric J. Savitz at eric.savitz@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Applied Materials received an upgrade from Redburn Atlantic analyst Timm Schulze-Melander. David Paul Morris\/Bloomberg One fact about the artificial intelligence trend is that running large language models and related inference software is going to be a boon for chip demand\u2014and that demand should trickle down to the semiconductor equipment industry. So at least in concept,<\/p>\n","protected":false},"author":1,"featured_media":36783,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[],"class_list":{"0":"post-36782","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-investing"},"yoast_head":"\nApplied Materials and 3 Other Chip Equipment Stocks for a New AI Play | Micro Loan Nexus<\/title>\n<meta name=\"description\" content=\"Applied Materials received an upgrade from Redburn Atlantic analyst Timm Schulze-Melander. 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