AMAT Stock Forecast: Developments in Supplemental Markets

This AMAT stock forecast article was written by Isaac Rothstein – Analyst at I Know First.


  • AMAT stock has consistently risen over the last five years
  • Operating costs are rising due to growth in research and development expenses for future growth
  • The semiconductor industry has grown rapidly over the past 20 years
  • Trade wars with China could hinder their growth due to China being their most profitable region for sales
  • I Know First algorithm remains Bullish for its one year forecast


Over the last five years, Applied Materials’ stock (AMAT) has risen by 225%. In addition, since the beginning of 2019 AMAT has had very steady and consistent growth, outside of the Coronavirus pandemic; however, since its yearly low of $36.64 on March 20th, AMAT has rebounded quickly and is nearing an all-time high of $69.44. Applied Materials stock forecast remains bullish; I expect them to further extend their upward trend.

Building for the Future

Although AMAT did not reach expected earnings last quarter, they still improved their revenue by 12%. This is very intriguing for multiple reasons. The first reason is that they continue to increase their dividend payout. Since they first offered dividends in 2005, AMAT has only increased their dividends. After having a relatively unstable quarter amidst the Coronavirus pandemic, they continue to believe that they can increase dividends while still being able to run efficiently.

In addition to increasing dividends, Applied Materials has also expanded Research and Development expenses. Since 2016 AMAT has increased its R&D expenditures by 38% (Yahoo Finance). During this same period, AMAT has increased revenue from supporting segments, such as Applied Global Services. On top of that, Applied Materials’ CEO said in an interview that they will increase spending in artificial intelligence, big data, cloud infrastructure, and automotive technology. These segments are essential for AMAT to gain stability outside of the very cyclical semiconductor equipment manufacturing sector and create many different revenue streams.

Supporting Market Segments

Source: Statista

The increased R&D expenses has helped AMAT become more well-rounded and expand into other segments such as Applied Global Services. Since 2015 AMAT has risen net sales from this sector by a substantial amount each year. Since 2015, AMAT’s net sales from Applied Global Services has grown by 57.5%.

On top of the Applied Global Services segment, AMAT has also seen improvement in display and adjacent markets. In the second quarter, there was a 5% increase in net sales as well as a substantial growth in operating margin compared to last year. As Applied Materials continues to increase its research and development expenses, I believe these segments will continue to grow and give AMAT more stability in the future.

Growing Industry

Source: Statista

The semiconductor industry is very cyclical with ups and downs, however, continues to grow over time. As long as technology continues to be more advanced, the semiconductor industry should follow. This industry is highly competitive amongst its top four businesses which makes it harder for them to stand out. In comparison to Lam Research Corporation (LRCX) and KLA Corporation (KLAC), Applied Materials has been underperforming, however, they now have the lowest PE ratio which displays their current undervalued price.

Source: Seeking Alpha
Source: Statista

From 2012 until 2018 the semiconductor market size grew very quickly but has then slowed down. This is highly due to the cyclicality of the industry; however, it is likely to rise once again in the near future. Due to this cyclical industry, it is very promising that AMAT has recognized they need to expand into multiple other sectors in order to stabilize their revenue rather than being fully exposed to the semiconductor cycles.

Turbulence with China Could Hurt Net Sales

Source: Statista

America’s relationship with China is extremely important for Applied Materials due to that being their highest region in sales. Since 2015 AMAT’s net sales from china has grown by 163% and is consistently their highest region of sales. High tensions between US and China could cause tariffs to be put in place – which would damage AMAT’s profit – or could lead to China creating their own semiconductor industry – which would be less expensive for them to use.

Although these are all reasonable concerns, Applied Materials has been doing business in China since 1984 and is very established. If tensions come down between the two countries AMAT should continue to perform strongly and expand in their leading region, in addition to continue their growth in Taiwan, America, and other regions worldwide.


Although American tensions with China have been a looming issue for AMAT, they have continued to rally since the beginning of the Coronavirus pandemic. Continuous growth in their supporting market segments gives them increased stability against the cyclical semiconductor industry. This industry is cyclical, however, continues to grow. With the growing size of the industry, in addition to successfully developing outside market segments, I am bullish that AMAT will continue to grow and gain stability throughout the next year.

As of July 9th, 2020, AMAT stock forecast is showing a bullish 1-year score of 112.06 with a predictability score of 0.7. A high signal score of 112.06 indicates that we expect further positive returns for AMAT. The predictability score ranges from -1 to 1 to demonstrate how our prediction correlates with the actual stock’s movements. AMAT’s 0.7 is extremely high and shows that this stock has a relatively high level of predictability. Barring anything out of the ordinary, we expect AMAT to continue its bullish trend through 2020 and into 2021.

How to further interpret this diagram

Past Success With AMAT Stock Forecast

AMAT Stock prediction

On May 30th, 2019, the I Know First algorithm resulted in a bullish 1-year AMAT stock forecast. At the time of the forecast, Applied Materials’ stock price was $39.45. On February 14th, 2020, prior to the Coronavirus, AMAT had a value of $67.37, growing by 70.77%. The algorithm was successfully able to predict the jump AMAT made in 2019 and 2020.

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Please note-for trading decisions use the most recent forecast