So I came upon $AMAT whilst browsing my list of tech stocks that had similar movement to $NVDA and that were more aligned with the production, research, and development side of things.
They caught my eye specifically because of the $4B EPIC Center they are building in Silicon Valley to collaborate with some pretty great companies, which include: AMD ($AMD), NVIDIA ($NVDA), INTEL ($INTC), IBM ($IBM), MICRON ($MU), SAMSUNG, TSMC ($TSM), and Western Digital ($WDC).
Apparently AMAT has a fairly strong relationship with several of these, and many of their top officers (including CEOs) helped make announcement videos for this project, going so far as to boast about the accomplishments of AMAT and how long some of them have worked together (15 years with Micron apparently!)
Without further adieu, here’s a bit about them:
What they do:
Provide manufacturing equipment, services, and software to the semiconductor, visual display, and related industries. Customers include manufacturers of semiconductor wafers and chips, liquid crystal and organic light-emitting diode (OLED) displays, and other electronic devices.
Where they conduct business:
The majority of their manufacturing takes place in Taiwan, S. Korea, and Singapore, with a handful of facilities between the US and Europe (specifically Germany and Greece)
Their research and development (R&D) main hub is in Singapore, but they also have several facilities across the US, namely in California and states near their university partners like MIT, ASU, and UT Austin to name a few.
So how is this an ER Play?
I went back to 2018 and looked at the Daily and Hourly charts for AMAT around ER time. The majority, with about 6-ish exceptions (out of 22) had a very good buying opportunity exactly 7 days prior to their ER between 1:30pm and 2:30pm for calls on the lead-up to their actual date of ER, with the peak stock price being the day before or day of by 1:30pm EST.
Next ER is August 17th, AH, and I plan to put this to the test.
What’s to like, long-term:
Aside from the mentions of AI and their obvious role in that niche, given they are a semiconductor manufacturer and have developed several key technologies in the field that are used by (according to the same videos I linked above) many other chip and part makers as seemingly industry standard, they are specifically looking to advance the processes and equipment used in these fields and seem to be uniquely positioned to do so, given their partnerships and roles in not only semiconductors but a lot of the other complimentary pieces, such as packaging and non-EUV (called Sculpta) patterning.
Their service revenue is 60% subscription based with a +90% renewal rate (according to their CEO during their most recent ER). So clearly their customers like what they have to offer.
I’m including their recent ER transcript and slideshow for your browsing pleasure, but overall it seems very positive on outlook. They have also crushed the last 4 ERs from an EPS standpoint, but they did lower guidance a bit in terms of revenues and EPS for next ER. In terms of stock value, it’s estimated intrinsic value is between $117 and $221. The fair value estimates I’ve seen range between $120 and $162, but there are some outliers going higher into the $200 area.
I will also add that their biggest potential pitfall is actually, to me, a selling point in that they are not very specialized given semiconductors aren’t exclusively their bread and butter. They have stiff competition on all fronts, but their willingness to diversify their approach and even go so far as to setup a center to collaborate with partners, hopefuls, and even some competitors is impressive to me. Shows they are really willing to push the envelope for the sake of better R&D output, which historically they have then put into action with their products in a profitable way.
