AMAT's Advanced DRAM Gains Traction: Will it Sustain its Momentum?

Core Insights - Applied Materials (AMAT) is witnessing significant momentum in the DRAM segment, driven by the demand from artificial intelligence and high-performance computing, making DRAM a key growth engine for the company [1] Revenue Growth - AMAT anticipates approximately 50% year-over-year revenue growth from leading-edge DRAM customers in fiscal 2025, highlighting the critical role of DRAM in supporting AI workloads and high-bandwidth applications [2] - The strength in DRAM has led to AMAT's etch business achieving over $1 billion in quarterly revenues for the first time [2] Innovations and Solutions - Customers are increasingly adopting new AMAT solutions to meet the stringent requirements of high-performance compute memory, including next-generation gap fill systems, advanced CVD products, and the Pioneer dielectric patterning system, all aimed at enhancing efficiency and performance in advanced DRAM production [3] Future Opportunities - Looking ahead, AMAT sees potential in the transition to vertical transistor (4F²) architectures around 2027-2028, which could result in more than five points of incremental market share gain for the company [4] - The growth of high-bandwidth memory (HBM) is also a significant driver, with HBM expanding at an annual rate of 30% to 40% and currently accounting for about 15% of total DRAM capacity, further strengthening demand for AMAT's equipment [5] Competitive Landscape - Competitors like Lam Research (LRCX) and ASML Holding (ASML) are also making strides in the DRAM market, with LRCX securing critical etch wins and ASML experiencing strong demand for its EUV systems from DRAM customers [6][7] Financial Performance - AMAT's shares have increased by 9.5% year-to-date, compared to a 33.3% growth in the Electronics - Semiconductors industry [8] - The company is trading at a forward price-to-sales ratio of 4.88X, which is lower than the industry average of 9.3X [10] - The Zacks Consensus Estimate for AMAT's fiscal 2025 earnings indicates a year-over-year growth of 9.48%, with upward revisions for fiscal 2026 estimates in the past month [11]