Is This the Best Stock to Own for the Next Decade of AI Expansion?

Core Viewpoint - Applied Materials is positioned as a key player in the AI chipmaking supply chain, providing essential equipment for semiconductor manufacturing, which is expected to see significant growth driven by AI advancements [1][4][12]. Company Overview - Applied Materials does not manufacture AI chips or provide AI services but supplies the systems necessary for producing advanced chips and displays globally [2][4]. - The company is the largest U.S. manufacturer of semiconductor equipment, with a market share of 17.4% in 2024, competing closely with Lam Research [6][7]. Market Position - Major semiconductor manufacturers, including Nvidia, Intel, and Samsung, are customers of Applied Materials, highlighting its critical role in the industry [5]. - The company’s market cap is approximately $183 billion, with a stock price of $230.07, reflecting a 48% increase this year and a 245% increase over the past five years [3][13]. Industry Outlook - Semiconductor sales are projected to reach $697 billion in 2024, with expectations of hitting $1 trillion by 2030 and doubling to $2 trillion by 2040, indicating a robust growth trajectory for the industry [12]. - Analysts anticipate a 4% revenue increase and an 8.1% growth in earnings per share for fiscal 2025 [12]. Challenges - A significant portion of Applied Materials' revenue (over one-third) comes from the Chinese market, making it vulnerable to geopolitical and trade tensions [8]. - The company has warned of potential revenue impacts due to ongoing trade issues, estimating a $600 million reduction in fiscal 2026 revenues [9]. - Planned layoffs of 4% of its workforce are aimed at enhancing competitiveness and productivity amid changing workforce needs [10].