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The Applied Materials Company: Down, But Definitely Not Out

As semiconductor production equipment companies go, Applied Materials is well positioned for growth.

Like a prizefighter hit hard and knocked to the canvas, the Applied Materials company, based in Austin, Texas,  has taken some lumps lately.

While profitable for the better part of a decade, it recently had a drop in stock price. It is down 37.4% after hitting its all-time high of $62.40 per share in March 2018. This resulted in lower revenue estimates for the third and fourth quarters of 2018. It also prompted firms like Deutsche Bank, Citi and Goldman Sachs to look less favorably on the semiconductor company, and the sector itself.

But like any seasoned scrapper with an iron chin, the Applied Materials company could soon rise and start swinging again. In fact, that is what President and CEO Gary E. Dickerson believes is happening as he touts, “We are firing on all cylinders, that is fueling our business. That is something we’ve never seen in the history of our company.”

Applied Materials Company CEO Gary Dickerson Quote

Thank the development of new innovations like autonomous vehicles, artificial intelligence, sensor technology, autonomous vehicles, memory power, and the Internet of Things (IoT) for that.

The Applied Materials Company at a Glance

The Applied Materials company provides manufacturing equipment, services, and software to the semiconductors and display-related industries. It chiefly develops, manufactures, and sells equipment used in the creation of microchips. The Applied Materials company supplies this equipment to global chipmakers like Intel, Micron, and Samsung. The semiconductor production equipment segment accounted for 65% of Applied Materials’ revenue in 2017.

Applied Global Services, along with Display and Adjacent Markets are two of its other business sectors.

While the semiconductor production equipment-side takes part in the fabrication of wafer-thin microchips and related aspects of that process, AGS handles installation, support, and maintenance.

Display and Adjacent Markets handles the various manufacturing processes of displays and monitors.

As a cornerstone of the semiconductor production equipment industry, Applied Materials might have a bullish future ahead.
Despite fits of market decline, the Applied Materials company could likely face growth with the rise of AI and IoT devices.

An Optimistic Future 

While the public impression on the Applied Materials company is not particularly in its favor, experts believe the company can return to its top spot by 2019. The Applied Materials company has a history of continually surpassing market expectations. Besides, it also has a history of long-term uptrend earnings revision.

Firms like the Applied Materials company are expected to flourish as more companies dip their feet in the artificial intelligence, big data, autonomous vehicles, and IoT sectors. All these next-gen tech companies need powerful, robust microchips to power devices, machines, and even autonomous vehicles.

One of Applied Material’s strengths is its customer-centric research and development. This allows the company to glean valid insights from the market to inform and propel the developments of its manufacturing materials.

A Wealth of Opportunities as Devices are Getting Smarter

The top tech companies are investing in AI technology to capture the needs of the market in the near future.

The Compound Annual Growth Rate (CAGR) of the AI market may increase to 50.5 percent between 2017 and 2021. Likewise, software for big data and analytics will multiply its CAGR by about 11.2 percent between 2018 and 2022. Plus, the IoT market’s CAGR could grow up to 7.39 percent between 2018 and 2023.

Applied Materials company CEO Gary Dickerson on Power of AI

All the companies in this space aim to handle tons and tons of data, and this requires cutting-edge technology in the world of semiconductors. The Applied Materials company is one such supplier that will undoubtedly benefit from expanded investments in research and development, its memory business and in manufacturing its equipment.

The Applied Materials company also has a presence in the photovoltaic market. It carries a range of technologies and systems required in the fabrication of photovoltaic panels. These are instrumental in converting sunlight into electricity. With the world more inclined to use green, renewable, and sustainable energy, the demand for solar panels will only grow.

Beyond the Present for the Applied Materials Company

While the valuation and the stock price of the Applied Materials company are down, experts believe now is the right time to buy their shares. The semiconductor industry will only grow as IoT, high-performance computing and AI become even more prevalent in all devices and machines.

After all, the world needs powerful microchips to work, travel, connect, and learn.

Beyond doubt, companies like Applied Materials act as the backbone of various tech. Without them, the world won’t have smartphones, laptops, smart technology, and advancements in medicine, science, and automobiles. Thus, regardless of which tech company comes out on top, each of them will always require the power of the microchip.

Hence, suppliers such as the Applied Materials company will be a wise bet to invest in or work with.

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