Applied Materials Earnings: We Like Growth Opportunity and Raise our Valuation to $193 From $168

After raising our long-term growth forecast, we raise our fair value estimate for wide-moat Applied Materials to $193 per share from $168. Applied’s fiscal third-quarter results and fiscal fourth-quarter guidance fit with our short-term expectations. We see the firm as well-positioned to benefit from rising chip complexity, including from investment in advanced artificial intelligence chips and high-bandwidth memory in the medium term. Longer-term, we see the firm’s growth opportunity as diverse, with demand for cutting-edge AI applications and memory complemented by lagging-edge chip demand for automotive and industrial applications. Applied’s broad portfolio allows it to enjoy these myriad demand drivers and also contributes to our wide economic moat rating. At our updated valuation, we see shares as fairly valued.