Applied Materials stock rises 6% on Thursday, up 22% YTD

Applied Materials experienced a significant stock increase of nearly 6% during Thursday's trading, contributing to a year-to-date rise of approximately 22%. This performance is notable in the context of the semiconductor industry, where Texas Instruments has seen a slightly higher gain of about 24% in the same timeframe. The current federal funds rate, which stands at 4.75% to 5%, suggests potential for further interest rate cuts, which could enhance demand for Applied's equipment. The semiconductor sector is witnessing a recovery after a challenging year marked by reduced capital spending post-COVID. Applied Materials reported better-than-expected Q3 2024 results, showcasing a 5% year-over-year revenue growth to $6.8 billion and earnings of $2.12 per share. The demand for semiconductor equipment is being driven by advancements in artificial intelligence, an area where Applied is strategically positioned to provide essential tools and services. Despite the positive outlook, the stock's performance over the past three years has been volatile, with returns fluctuating significantly. In 2021, the stock surged by 84%, followed by a decline of 38% in 2022, and a rebound of 68% in 2023. Currently, Applied Materials stock trades around $197 per share, with projections for Q4 FY 2024 estimating revenue of approximately $6.93 billion and adjusted earnings between $2.00 and $2.36 per share. While the company is poised for growth, it faces risks, and analysts value the stock at $222 per share, indicating a potential upside of about 10% from its current price. The ongoing demand for high-end equipment and advanced process technologies, particularly in AI applications, positions Applied Materials favorably for future growth.