Applied Materials' DRAM business surges as AI-driven demand and key partnerships fuel growth, but rising competition raises questions on how long momentum lasts
Applied Materials $AMAT’ AMAT three most critical growth pillars are DRAM, logic and advanced packaging, all driven by AI. DRAM has grown to contribute 34% to AMAT’s Semiconductor Systems revenues, rising from the massive equipment intensity, which has made its DRAM business the fastest-growing business in 2025.
AMAT is experiencing an inflection in 4F2 with 6F2 as the future of DRAM technology. The transitions to advanced nodes such as 6F2 and future 3D DRAM architectures are increasing process complexity and demand for deposition, etch and inspection tools, paving the way for AMAT’s most advanced wafer fabrication equipment.
Applied Materials’ DRAM offerings are gaining traction as customers are aggressively investing in 6F2 nodes supported by rising demand for high bandwidth memory (HBM). AMAT is also deepening its expertise in DRAM technology through collaboration with the world’s leading semiconductor companies.
Applied Materials and SK hynix have formed a long-term R&D partnership to accelerate next-generation memory innovation, particularly in DRAM and HBM for AI applications. The collaboration will focus on new materials, advanced process technologies and 3D packaging to enhance performance and efficiency.
Applied Materials and Micron $MU Technology have formed a strategic partnership to advance next-generation AI memory solutions in the United States. The collaboration will focus on developing advanced DRAM, HBM and NAND technologies, combining Applied Materials’ process expertise with Micron’s manufacturing capabilities.
Lam Research $LRCX LRCX secured multiple critical etch wins at a major DRAM manufacturer with its new Akara etch system, which supports 3D DRAM architectures. This was supported by LRCX’s customer investments in DDR5, LPDDR5 and high-bandwidth memory. Additionally, Lam Research’s Aether dry-resist technology was recently selected as the production tool of record for a leading DRAM customer, securing a foothold in this high-growth segment.
ASML $ASML Holding ASML is experiencing strong demand from DRAM and logic customers, which are ramping leading-edge nodes using ASML’s NXE:3800E EUV systems. Additionally, ASML noted that multiple DRAM customers are adopting EUV lithography, which helps in shortening cycle time and lowering costs. However, AMAT offers a broad range of WFE products that do not compete directly with ASML and Lam Research, making the stock worth holding.
Shares of Applied Materials have surged 54.8% year to date compared with the Zacks Electronics - Semiconductors industry’s growth of 13.6%.
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From a valuation standpoint, Applied Materials trades at a forward price-to-sales ratio of 9.36X, higher than the industry’s average of 7.89X.
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The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 and 2027 earnings implies year-over-year growth of 17.9% and 26.4%, respectively. The estimates for fiscal 2026 and 2027 have been revised downward over the past 30 days.
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Applied Materials currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
This under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.
With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.
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