Should You Invest in Applied Materials?

PHOTO CREDIT: Applied Materials

OVERVIEW

Why You Should?

  1. The Biden administration will benefit the company. Biden wants to invest in the nation’s semiconductor manufacturing process, something that will increase the company’s domestic sales. Biden also wants to sign trade deals with our allies, something that will help the company sell more of its machines and services internationally.
  2. The current semiconductor shortage comes to show the opportunity that Applied Materials has. The company is currently producing machines to manufacture chips and other semiconductor products in order to help manufacturers (like TSMC) capitalize on high demand. This short to mid-term shortage will benefit the company sells more products.
  3. The manufacturing business model will also benefit investors gain exposure in the semiconductor market without having to own a chip company like Nvidia. Applied Materials manufactures machines and offers services that are used by manufacturers (like TSMC) to fulfill orders from Nvidia, Apple, AMD, and other chip designers. This limits risk for Applied Materials.
  4. The company has seen rising revenues and profits over the past couple of financial years due to the reasons mentioned above. This has helped the company grow its business and sell improved machines and services around the world. This has also benefited investors in the company. In the financial year of 2020, the company reported revenues of around 17.2 billion and profits of around 3.62 billion. Both of these metrics are higher than what the company reported in the financial year of 2019 when they had revenues of around 14.61 billion and profits of around 2.71 billion.
PHOTO CREDIT: Yahoo Finance

Why You Should Not?

  1. The COVID-19 pandemic has negatively impacted the company. Supply chain issues, inflation, as well as other issues caused by the pandemic, have hurt the company’s results and operations over the past year. This will continue to negatively impact the company and its investors in the short to mid-term.

MY OPINION

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.