Key Takeaways AMAT's etch business exceeded $1B in Q3, driven by strong DRAM demand for AI applications.New DRAM wins include advanced gapfill tools and Pioneer dielectric patterning systems.AMAT sees 50% revenue growth from leading DRAM customers in fiscal 2025, eyeing share gains.Applied Materials (AMAT) is witnessing strong growth in its memory business, which is being driven by strong demand for advanced Dynamic Random Access Memory (DRAM). In the third quarter of fiscal 2025, a key highlight was Applie ...

Core Viewpoint - Bank of America Securities maintains a Neutral rating on Micron Technology despite strong earnings and positive guidance due to muted demand in the PC and phone markets affecting memory chip pricing [1] Financial Performance - Micron reported third-quarter revenue of $9.3 billion, a 16% increase, surpassing the consensus estimate of $8.87 billion [2] - The company achieved adjusted earnings of $1.91 per share, exceeding analyst expectations of $1.60 per share [2] - For the fourth quarter, Micron expects revenue of $10.7 billion, plus or minus $300 million, compared to estimates of $9.88 billion, and anticipates adjusted earnings of $2.50 per share, plus or minus 15 cents, against estimates of $2.01 per share [3] Market Position and Product Outlook - Micron is the last remaining pure-play U.S.-based memory company and the third-largest supplier of memory chips, including DRAM and NAND [4] - The company supports trends in artificial intelligence, 5G, machine learning, and autonomous vehicles, with an improved outlook for DRAM and a ramp in High Bandwidth Memory (HBM) [4] Gross Margin and Inventory Management - Micron expects a fiscal fourth-quarter gross margin of 42.0%, up from the guided 36.5% in the fiscal third quarter, attributed to a strong pricing environment and better product mix [5] - Management anticipates exiting fiscal 2025 with tight DRAM inventories and significantly reduced NAND inventories, aiming for overall company inventory near the target 120-day level [6] AI and HBM Opportunities - Micron's HBM opportunities are expanding, with shipments of HBM3e 12-high to four customers, and a projected market share of 20-25% in the $35 billion Total Addressable Market for calendar 2025, potentially reaching $2.4-2.5 billion by the end of the fiscal first quarter [7] Future Projections - The analyst raised sales estimates for calendar years 2025-2027 by 4-6% and EPS by 13-23%, but reiterated a Neutral rating due to uncertain NAND pricing and ongoing cost headwinds affecting gross margins into calendar 2026 [8] - Projected fourth-quarter sales are now $10.71 billion (previously $9.83 billion) and adjusted EPS of $2.50 (previously $1.82) [8]

Core Insights - Lam Research's memory segment, which includes both DRAM and NVM divisions, is experiencing significant growth, with revenues increasing nearly 24% year over year to $1.31 billion in Q3 FY25 [1][10]. Memory Segment Performance - The NVM division is seeing strong demand due to technology transitions to 256-layer NAND devices, with revenues growing approximately 21% year over year in the third quarter [2]. - The DRAM division's growth is driven by a shift towards high-bandwidth memory (HBM) and increased adoption of DDR5, resulting in a revenue increase of 26.7% year over year in Q3 [3][10]. Innovations and Future Outlook - Lam Research is investing in new technologies, including atomic layer deposition (ALD) innovations and upgrades for DDR5, LPDDR5, and HBM processes, which are gaining traction among customers [4]. - Despite trade restrictions with China, the company maintains consistent revenue growth, with Korea and Taiwan contributing 48% of revenues in Q3, while China accounted for 31% [5]. Competitive Landscape - Lam Research competes directly with Applied Materials and ASML Holdings in critical wafer fabrication stages, with both competitors also experiencing increased demand for their DRAM technologies [6][8]. - ASML's strong product demand is driven by its EUV systems, which are essential for leading-edge nodes, presenting stiff competition for Lam Research as it moves towards EUV lithography [7]. Financial Performance and Valuation - Lam Research's shares have gained 26.8% year to date, outperforming the Zacks Electronics – Semiconductors industry's growth of 6.5% [9]. - The company's forward price-to-earnings ratio stands at 22.99, below the industry's average of 26.82, indicating potential undervaluation [11]. - The Zacks Consensus Estimate for fiscal 2025 earnings has been revised upward by 7.2% to $4 per share, suggesting a year-over-year growth of 33.78% [12].