Applied Materials, Inc. (NASDAQ:AMAT) is one of the Best Stocks to Buy According to Abrams Bison Investments. On July 28, Barclays analyst Tom O’Malley lifted the price objective on the company’s stock to $170 from $160, while keeping an “Equal Weight” rating. The firm expects a healthy semiconductor capital equipment setup in H2 2025 on better China dynamics. However, it believes that the Street estimates for 2026 are structurally too high. Applied Materials, Inc. (NASDAQ:AMAT)’s President and CEO highlighted that the broad capabilities and connected product portfolio of the company continue to drive healthy results in 2025 amidst a highly dynamic macro environment.
A technician in a clean room assembling a semiconductor chip using a microscope.
Notably, high-performance, energy-efficient AI computing is the dominant driver of semiconductor innovation, as Applied Materials, Inc. (NASDAQ:AMAT) continues to work closely with its customers and partners to ramp up the industry’s roadmap. Applied Materials, Inc. (NASDAQ:AMAT) delivered healthy performance in its Q2 2025, with 7% YoY revenue growth, record EPS, and shareholder distributions of ~$2 billion.
Amidst a dynamic economic and trade environment, Applied Materials, Inc. (NASDAQ:AMAT) has not seen significant changes to customer demand and remains well-placed to navigate evolving conditions thanks to its strong global supply chain and diversified manufacturing footprint. Vltava Fund, an investment management company, recently released its Q4 2024 investor letter. Here is what the fund said:
“In the quarter just ended, we added to the portfolio two new companies from the technology sector: Applied Materials, Inc. (NASDAQ:AMAT) and Lam Research. Both are in the same industry as is another of our investments that we have held for some time, KLA Corporation. This industry is termed semiconductor devices and materials. One chapter in Hidden Investment Treasures is devoted to investing in technology companies and, among other things, the controversy over what really constitutes a technology company. As investors, we try to view technology companies not according to the industry into which they are formally classified but by whether the technologies and technological processes used in the production of their products and services are an essential element in value creation or if they are a source of long-term, sustainable competitive advantage. Among the companies that are formally categorized as technology-based and fall into either the Information Technology or the Communications Services sector, we find some that can be said to be just that but also others for which this classification is at least debatable. Similarly, among companies that do not formally belong to these two sectors, we find many that clearly are built to a large extent on technology and base their market positions and competitiveness on it. In the cases of Applied Materials and Lam Research, there can be no doubt that these are technology companies not only as a formality but also in fact.
Applied Materials provides manufacturing equipment, services, and software for the semiconductor, display, and related industries. Its principal business activities are semiconductor systems and Applied Global Services. Its largest customers are Samsung and Taiwan Semiconductors, but its overall clientele is more diversified than is that of Lam Research. At first glance, it would appear that Applied Materials has a somewhat less tangible and definable competitive advantage compared to KLA Corporation and Lam Research, but the numbers do not support such a view. Net margins likewise in the neighborhood of 27% and ROCE around 30% are outstanding. Basically, it can be said that all three companies we own have very similar underlying profitability metrics. Even their valuations, growth, and potential are similar. All have strong free cash flow and strong balance sheets, and they are regularly buying back their own shares over the long term and in large volumes…” (Click here to read the full text)
While we acknowledge the potential of AMAT to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than AMAT and that has 100x upside potential, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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