top of page

Hype Asset of the Day | March, 2nd, 2022

Applied Materials, Inc. (NASDAQ: AMAT)

Applied Materials, Inc. is a corporation registered in America that supplies equipment, services and software for the manufacture of semiconductor (integrated circuit) chips for electronics, flat panel displays for computers, smartphones, televisions, and solar products. With its resilience through prevalent macroeconomic headwinds, the company has seen an increase in mentions by 149% over the last day, prompting investors to wonder what makes the company worth investing in. Currently, shares of Applied Materials trade at $115.82 each.

Positive Hype

Applied Materials is a company that has done very well for itself, featuring high growth despite macroeconomic headwinds, here are some of the reasons you might want to consider taking a position in the company now.

  • Applied Materials announced two new products increasing its solution offerings for the semiconductor manufacturing market, this could allow the company to take even more market share from its competitors.

  • Applied believes the new machine will save foundries about $250 million per 100,000 wafer starts per month on capital costs, or $50 per wafer, while also greatly lowering electricity and water usage, lowering the carbon intensity of chip making.

  • The company just reported 7% growth in the quarter ending Jan. 31. Applied usually guides conservatively and beats expectations.

  • Management noted that over the past 10 years, from 2013 through 2022, Applied grew free cash flow at a 30% compounded rate, and its return on invested capital has grown to 35%.

  • The company has returned 106% of that free cash flow to shareholders, retiring 40% of shares outstanding through buybacks. Applied has also increased its dividend at a 14% annualized rate over the past 17 years.

  • On its recent conference call with analysts, management noted that not only have trailing-edge technologies like ion implantation remained in high demand but that demand is actually accelerating.

  • According to McKinsey, the chip industry is set to grow from about $600 billion today to $1 trillion by 2030.

Negative Hype

Although there are lots of very good reasons to be picking Applied Materials up now, no investment is perfect and here are two of the reasons Applied Materials might not be.

  • Applied also guided to a slight 5% decline in revenues next quarter. However, that was almost entirely due to a problem at one of its suppliers, which experienced a ransomware cyberattack and had to curtail shipments.

  • Advanced semiconductors have a dark side, with extreme cyclicity in some end markets.


With its recent new machine announcements and all-star numbers, Applied has made its way to the very elite league of S&P 500 companies, and there isn’t much reason the strong performance wouldn't continue. Even better, despite all these positives, Applied trades at a below-market multiple of just 15 times earnings. With its diversification, high cash flows, low capital intensity, shareholder-friendly management, and relatively low multiple, Applied would be the semiconductor stock investors should consider if they could only buy one company in the sector.

If you’d like to receive more trending stocks straight to your inbox, check out our premium plans. Alternatively, if you’d like to hear more about the services offered by HypeIndex, you can check out our FAQ page.

HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.

The algorithm for our proprietary HypeIndex score is based on sentiment analysis, data science and machine learning.

5 views0 comments


bottom of page