Mizuho Analyst Vijay Rakesh confirmed purchase on Applied Materials, Inc AMAT with a target price of $150. Rakesh hosted AMAT’s CFO Brice Hill and Raman Achutharaman, Head of Technology and Strategy (Semiconductor Products) at his 4th Annual Mizuho Storage & AI Virtual Series.
Key highlights from Rakesh included the node transition, which delivered c.20% higher capital intensity with c.$1B/100K incremental TAM for GAA with 5-10 incremental process steps.
AMAT identified an increase in process steps with GAA that could potentially result in ~$1 billion in additional revenue per 100,000 wafers starting at ~3 nm.
Rakesh writes that AMAT is well positioned for “the next frontier” in transistors to Nanosheets/ForFETs and BPSD wiring.
As transistors continue to shrink and new architectures are developed, power supply and wiring resistance challenges arise.
New techniques to address include Buried Power Rail (BPR) and Back Side Power Distribution (BSPD) (AMAT found that its pure tungsten PVD could lower resistance by 50-60% to increase performance improve (stable performance, lower resistance) and reduce surface area (increases transistor density).
The analyst highlighted that AMAT’s foundry/logic mix, ICAPS, is >3 quarters behind, buffering a potentially softer C23E WFE and could still deliver strong sales.
Rakesh said he sees weakness in Memory WFE, although he believes this may be partially offset by continued strength of Foundry/Logic and lagging ICAPS demand >3 quarters behind.
While AMAT stock has corrected concerns about a softer C23E WFE and geopolitical risks, key turning points in process nodes leading to potential stock gains could position AMAT well.
Rakesh said that AMAT is a key semiconductor technology enabler with structural tailwinds.
Price promotion: AMAT shares traded 0.79% lower at $90.51 on the last check Tuesday.
Photo via Wikimedia Commons
