ASYS' AI Equipment Sales Surge 5x Y/Y: Can the Momentum Continue?

Core Insights - Amtech Systems (ASYS) reported strong third-quarter results for fiscal 2025, with revenues of $19.6 million, a 26% increase from the previous quarter, and earnings per share of 6 cents on a non-GAAP basis, compared to a net loss of 16 cents in the prior quarter [1][4]. Revenue Drivers - The primary growth driver was the demand from the artificial intelligence (AI) market, with sales of AI infrastructure equipment increasing fivefold year-over-year, contributing approximately 25% to Thermal Processing Solutions' revenues [2][9]. - Management indicated that bookings during the third quarter suggest sustained strong demand for AI-related products moving forward [2]. Business Segments - Despite the growth in AI, demand for products related to older semiconductor nodes, particularly in automotive and industrial markets, remained weak [3]. - To mitigate this, Amtech is focusing on recurring revenues from consumables, spare parts, and services, which accounted for about 40% of total sales in the third quarter [3]. Cost Management - The company has been actively working on cost reduction, having decreased its manufacturing footprint from 7 sites to 4, and shifting some production to partners, resulting in annual savings of $13 million [4]. Future Outlook - For the fourth quarter of fiscal 2025, Amtech expects revenues between $17 million and $19 million, with growth in AI-related equipment sales anticipated to be the main growth catalyst [4]. Competitive Landscape - Amtech Systems faces competition from larger companies like Applied Materials (AMAT) and Lam Research (LRCX), which are also focusing on AI-related chip packaging [5]. - In the fourth quarter of fiscal 2025, Lam Research reported revenues of $5.17 billion, a 34% year-over-year increase, driven by strong demand for its etch and deposition tools used in AI chip production [5]. - Applied Materials generated revenues of $7.3 billion in the third quarter of fiscal 2025, reflecting a 7.7% year-over-year growth, attributed to demand for its advanced packaging tools for AI chips [6]. Stock Performance and Valuation - Year-to-date, Amtech Systems' shares have increased by 45.5%, outperforming the Zacks Semiconductor - General industry, which grew by 22.8% [7]. - Amtech trades at a forward price-to-sales ratio of 1.15X, significantly lower than the industry average of 13.89X [10]. Earnings Estimates - The Zacks Consensus Estimate for Amtech Systems' fiscal 2025 is a loss of 6 cents per share, which has been revised upward over the past 30 days [13]. - For fiscal 2026, the earnings estimate is 15 cents per share, indicating a year-over-year growth of 350% [13].