Applied Materials jumps 15% as AI memory shortage extends to 2028

Applied Materials shares jumped 15 percent to $501.77 on July 30 after Samsung warned the AI memory shortage will stretch into 2028.

CEO Gary Dickerson said the AI build-out, combined with the company's positions in leading-edge logic, DRAM, and advanced packaging, provides "an exceptionally strong foundation for sustained, multi-year revenue and profit growth."

The move came without any company-specific news from Applied. The trigger was a cascade of sector signals: Lam Research reported record June-quarter revenue and guided for about $8.1 billion in September-quarter revenue, Samsung said the memory shortage will worsen through 2027 and persist into 2028, and Microsoft's strong Azure growth lifted capital spending confidence. The PHLX Semiconductor Index rose about 8 percent on the day, with Micron gaining about 18 percent and Lam Research up roughly 18 percent.

The Aug. 13 report has two jobs: deliver on the roughly $9 billion revenue guide and back the 30 percent calendar 2026 growth call. Until then, Thursday's gain is a bet on results Applied hasn't reported yet.

The stock remains more than 30 percent below its 52-week high of $739.67, set on June 30. The day before Thursday's surge, AMAT sat near $436, down 39.63 percent from that peak — one of the ugliest month-long drawdowns a mega-cap chip name has taken in this cycle. Michael Burry, who shorted the 2008 housing market, disclosed a fresh AMAT short at $729.40 on June 30.

Applied's own fundamentals support the rally. In May, the company reported record fiscal second-quarter results: revenue rose 11 percent year over year to $7.91 billion, and non-GAAP earnings per share grew 20 percent to $2.86. Management guided for fiscal third-quarter revenue of about $8.95 billion, plus or minus $500 million, which would be another record. Applied also raised its quarterly dividend 15 percent this year to $0.53 per share, its ninth straight annual increase.

The memory trade is the core driver. Samsung told investors it expects the chip crunch to run through 2028, backing that view with multi-year supply deals with the five largest data center operators. Micron CEO Sanjay Mehrotra had already warned in June that tight conditions could persist beyond calendar 2027 because AI demand is running ahead of supply across segments. AWS revenue rose 36.7 percent year over year to $42.2 billion, its fastest growth in 18 quarters, while Microsoft shares jumped 16 percent after strong Azure growth added about $450 billion in market value in a single day.

Applied sells the tools that build memory. The company holds the number one position in high-bandwidth memory packaging, and its DRAM equipment market is expected to run more than twice the size of the NAND market for the foreseeable future. In HBM4, the base die beneath every memory stack is moving to advanced FinFET logic, pulling Applied's foundry-logic tools along with its memory tools.

Goldman Sachs raised its Applied Materials price target to $645 from $520 in early July while keeping a buy rating. Morgan Stanley and Mizuho also lifted targets on the stock in July. The stock trades at about 28.6 times forward EV/EBITDA, a premium to Lam Research at 26.4 times and well above NVIDIA at 15.5 times.

The Aug. 13 print is where Applied proves the bounce deserved. After the close, the company reports fiscal Q3, already guided to $8.95 billion in revenue, up about 23 percent year over year, and $3.36 in non-GAAP EPS. The number that decides the reaction is not the headline beat but the calendar 2026 equipment growth outlook management raised to more than 30 percent last quarter. Reaffirm or lift it, and the July 30 rally starts to look like a floor forming. Trim it, or sound cautious on memory pricing, and the bounce reads as a trap set by one good day in the sector.

This article is for informational purposes only and does not constitute investment advice.