Applied Materials stock: Should you buy it right now?

Applied Materials (AMAT) is a leading supplier of equipment, software and services to the semiconductor and electronic industries. It is a top player in materials engineering solutions used to design new chips and advanced displays for customers worldwide.

The elevated demand for chips across several end markets has been driving the growth of Applied Materials stock. As a result, the company’s share price has climbed more than 120 percent over the last year and nearly +60 percent so far in 2021.

Strong Financial Results & Outlook

Applied Materials once again beat expectations for the second quarter ended May 2 and issued a solid financial outlook for the third quarter. The company reported an adjusted profit of $1.63 per share, ahead of the consensus forecast of $1.51 per share. In addition, total revenue for the quarter jumped 41 percent to $5.58 billion, exceeding analysts’ average estimates of $5.41 billion.

Looking forward, Applied Materials expects to report adjusted earnings per share in the range of $1.70 to $1.82 and revenue between $5.72 billion and $6.12 billion for the third quarter. The financial guidance for the current quarter is above the consensus forecast of $1.56 for adjusted earnings and $5.53 billion for revenue.

Bottomline

According to an estimate, the global semiconductor demand is expected to rise 11 percent on a year-over-year basis in 2021, compared to 7 percent last year. Moreover, industry experts believe the chip shortage will last at least for another couple of quarters. As a result, the demand for Applied Materials products and services will continue to stay high, which will positively impact its share price.