Applied Materials (AMAT) sales are expected to rebound to double-digit growth from fiscal year 2025 as the company is well leveraged in artificial intelligence silicon technologies like high-bandwidth memory, advanced packaging, and leading-edge logic, BofA Securities said in a note Friday.
The investment firm expects growth in dynamic random access memory, or DRAM, shipments to China to either slow down or stabilize in fiscal H2, putting pressure on Applied Materials’ gross margin as the year progresses. This will be offset by increased demand for high-bandwidth memory and double data rate, BofA added.
The company is also likely to face challenges as ICAPS is expected to decline this year, according to the note. BofA said Applied Materials’ competitors, which have a greater focus on leading-edge logic, might perform better.
The firm said leading-edge logic will recover in fiscal H2 due to growth in gate-all-around, backside power delivery, and advanced packaging.
BofA raised Applied Materials’ price objective to $222 from $185 and reiterated the buy rating.
The company shares were down 5.4% in recent trading Tuesday.