Investments in Advanced Technologies Poised to Significantly Boost Revenue Streams

What are the underlying business or industry changes driving this perspective?

• Leading-edge foundry and logic investments are growing, expecting a more than $1 billion increase in available market from gate-all-around transistors, targeting over 50% of process equipment spending in this area. This could significantly boost revenue from leading-edge foundry and logic sectors.
• Expansion into high-bandwidth memory (HBM) for DRAM, with HBM-related packaging revenues expected to grow 4x to almost $0.5 billion in fiscal 2024. This growth in the DRAM sector, particularly in HBM, is a key revenue driver.
• Strong position in advanced packaging, with anticipated growth in revenue to approximately $1.5 billion in fiscal 2024. The potential to double this business as heterogeneous integration becomes more widespread can significantly impact revenue and market share.
• Investments in cold field emission (CFE) eBeam technology, which is critical for 2D and 3D imaging, could grow by a factor of 4 in 2024. This positions Applied Materials to gain a larger share of the metrology and inspection market, impacting revenue from equipment sales positively.
• The increasing importance of ICAPS (IoT, Communications, Automotive, Power, and Sensors) with over 20 new ICAPS products released, targeting high-value device innovations. This can broaden Applied Materials' market and increase revenue from the growing semiconductor applications in these areas.

Figures in the charts may differ slightly from those mentioned in the narrative

How have these above catalysts been quantified?

• Analysts are assuming Applied Materials's revenue will grow by 7.0% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 27.0% today to 26.1% in 3 years time.
• Analysts expect EPS to reach $10.5 ($8.5 billion in earnings) by about February 2027, up from $8.6 today.

Figures in the charts may differ slightly from those mentioned in the narrative

What could happen that would invalidate this narrative?

• There are potential delays in leading-edge foundry logic projects that could disrupt revenue expectations and impact growth in high-demand areas such as advanced logic and compute memory.
• Softness in the NAND market may continue to be a factor, which could limit expected revenue growth in this segment despite overall technology transitions or layer count increases.
• The normalization of the China mix from heightened levels back to a more traditional level could lead to a decrease in gross margins and impact overall profitability.
• Digestion in the ICAPS market, after years of strong growth, could lead to a short-term decrease in revenue from this segment, impacting total company performance.
• Uncertainty around the timing and impact of CHIPS Act funding for fab construction and expansion projects in the U.S. may cause variability in demand for equipment and services, potentially impacting future revenue growth projections in foundry logic and other areas.