Applied Materials (AMAT) stock gained 2% on Tuesday after the chip equipment manufacturer announced deals with semiconductor companies Micron Technology (MU) and South Korea’s SK Hynix (HXSCL) to develop next-generation artificial intelligence (AI) memory solutions. Shares of Applied Materials have rallied 131% over the past year, driven by AI-led demand for semiconductor equipment.
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AMAT to Develop AI Memory Solutions in Partnership with Micron, SK Hynix
Applied Materials will collaborate with Micron Technology to develop next-generation DRAM (Dynamic Random-Access Memory), high-bandwidth memory (HBM), and NAND solutions that enhance the energy-efficient performance of AI systems.
The deal between the two companies will combine the research and development capabilities of Applied Materials’ EPIC (Equipment and Process Innovation and Commercialization) Center in Silicon Valley and Micron’s innovation center in Boise, Idaho, to bolster semiconductor innovation in the U.S.
Meanwhile, Applied Materials’ long-term agreement with SK Hynix will accelerate the development of next-generation DRAM and HBM solutions that are crucial for AI and high-performance computing. Engineers from the two companies will work at AMAT’s EPIC Center to advance innovation in materials, process integration, and 3D advanced packaging.
These deals come as a massive build-out of AI infrastructure by U.S. tech firms such as Google-parent Alphabet (GOOGL), ChatGPT maker OpenAI, and Microsoft (MSFT) has sparked huge demand for memory chips, tightening supply and driving prices higher.
Is AMAT a Good Stock to Buy?
Given a strong demand backdrop, Wall Street has a Strong Buy consensus rating on Applied Materials stock based on 26 Buys and one Hold. The average AMAT stock price target of $428.84 indicates 24% upside potential.
