Is It Finally Time to Buy This Incredibly Cheap Semiconductor Stock Following Its Latest Crash?

Core Viewpoint - Applied Materials experienced a significant stock decline of 9% following the release of its fiscal Q4 results, despite exceeding revenue and earnings expectations, leading to a total loss of 34% in stock value since July [1][2]. Financial Performance - Fiscal Q4 revenue increased by 5% year over year to a record $7.05 billion, with adjusted earnings rising 9% to $2.32 per share, surpassing analyst expectations of $2.19 per share on revenue of $6.97 billion [4]. - Sales of foundry and logic equipment grew by 12% year over year, driven by demand for gate-all-around (GAA) transistor nodes used in AI chip manufacturing [5]. - The transition to GAA technology is expected to expand Applied Materials' available market from approximately $12 billion to $14 billion for every 100,000 wafer starts per month of capacity [6]. Market Outlook - CEO Gary Dickerson expressed confidence in capturing over 50% of process equipment spending for GAA nodes, with revenue from GAA equipment reaching $2.5 billion in fiscal 2024, anticipated to double in the next fiscal year [7]. - Despite strong performance in certain segments, weak spending in other semiconductor markets like communications and automotive has impacted overall guidance, with earnings forecasted at $2.29 per share and revenue guidance at $7.15 billion, slightly below consensus estimates [8][9]. Future Growth Potential - The company’s top line is projected to increase by 6.5% year over year, with non-GAAP earnings expected to rise by 7.5% [9]. - Analysts predict a double-digit increase in revenue and earnings for fiscal 2025, indicating a potential recovery from the previous fiscal year's growth of only 2% in revenue [10]. Investment Opportunity - Current valuation at around 19.6 times trailing earnings presents a buying opportunity compared to the Nasdaq-100 index's earnings multiple of 33 [13]. - A 12-month price target of $231 suggests a potential 37% upside from current levels, driven by strong demand for AI chips and possible recovery in other semiconductor segments [14].