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Semiconductor Sales to Aid Applied Materials (AMAT) Q2 Earnings

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Applied Materials, Inc.’s (AMAT - Free Report) second-quarter fiscal 2021 results, which are scheduled to release on May 20, are likely to reflect solid momentum across the Semiconductor Systems segment.

The underlined segment offers equipment for front-end operations in the semiconductor manufacturing process.

We note that the companyhas been leading the global semiconductor industryfor more than20 years. Moreover, it is a global leader in semiconductor equipment sales.

Moreover, the segment has become an integral division of the company as it generates a significant part of net sales. Notably, Semiconductor Systems sales were $3.6 billion, accounting for 69% of net sales in the last reported quarter. The figure also rose 26.3% year over year.

The rising demand for semiconductor equipment is expected to have continued driving the segment’s fiscal second-quarter sales.

For second-quarter fiscal 2021, the Zacks Consensus Estimate for semiconductor sales is pegged at $3.85 billion, suggesting growth of 50.1% from the year-ago quarter’s reported figure.

Click here to know how the company’s overall fiscal second-quarter performance is likely to have been.

Factors at Play

The Semiconductor Systems segment is expected to have continued benefiting from the growing traction across etch, metal deposition systems and chemical-mechanical planarization.

Moreover, the company’s latestapplication wins for its high-growth semi products in dielectric deposition, etch and inspection are expected to have contributed to the fiscal second-quarter performance.

Additionally, Applied Materials’ wining critical applications in NAND are expected to have benefited its position in etch in the quarter under review.

Further, the company is expected to have gained traction in the IoT, communications, automotive, power and image sensor markets, courtesy of its strong investments in capacity and new advanced technologies,and growing demand for specialty nodes.

Furthermore, increasing customer spending in foundry and logic is anticipatedto have acted as a tailwind. Moreover, this is likely to have aided the company’s momentum across optical wafer inspection space in the to-be-reported quarter.

Also, solid momentum across technologies such as — Epitaxy, Physical Vapor Deposition, Ion Implant, Rapid Thermal Processing, and Metrology and Inspection — is expectedto have aided this segment’s performance inthe fiscal second quarter.

Zacks Rank & Stocks to Consider

Currently, Applied Materialscarry a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are NVIDIA Corporation (NVDA - Free Report) , NXP Semiconductors N.V. (NXPI - Free Report) and Texas Instruments Incorporated (TXN - Free Report) . All companies carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rates of NVIDIA, NXP Semiconductors and Texas Instruments are pegged at 15.23%, 10% and 9.33%, respectively.

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