Stocks to Rise Amidst Falling AI Banner: Applied Materials
Shares of Applied Materials Inc (AMAT) are stable, trading steadily at a time when many major tech stocks experience some moderate price adjustment. Its market value has already increased by more than 40% since mid-December when the company became an active part of the global chip rally. However, AMAT faced only a slight, nearly 6% correction at the start of the hectic week. It continues to consolidate around $200 per share following a renewed all-time record at $212.6 on closing price on March 7.
AMAT got at least two upside drivers during this month. One of them was raising the company's dividend payments by 25%, citing "robust financial performance and optimistic outlook". The announcement from the board of directors just came soon after the weekend to confirm the seventh year in a row when this large producer of semiconductor equipment maker has climbed in terms of its dividend cash. A $0.40 per share instead of $0.32 per share is scheduled to be distributed on June 13, to all shareholders who would own the stock on May 23. This represents at least an extra reason for sitting around and waiting despite a possible sideways action, even if the remainder of the segment may move up and down. Of course, another important condition is just to be aware that the company's main business is O.K.
In this context, another driver was provided by Bloomberg, which referred to people familiar with the matter who shared the details concerning two big Chinese companies, Huawei Technologies and Semiconductor Manufacturing International Corp (SMIC) as they began producing their advanced chips last year. Sources say SMIC allegedly used technology know-hows from Applied Materials and Lam Research Corp (LRCX) when developing its 7-nanometer chip for Huawei, as the companies had time to organize the process before the US government banned such sales to China. As a result, SMIC was able to make the chip for Huawei to power a very popular Mate 60 Pro phone. Anyway, this speaks in favour of AMAT's higher potential for modern chip technologies. Shares of Lam Research also hit their new historical price peak on March 7 after climbing by 28% year-to-date.
Brice Hill, a senior vice president at AMAT, expressed confidence in his company's full ability to sustain profitable growth and strong free cash flow in 2024, surpassing an average performance of the semiconductor equipment segment. He added that AMAT's services business would achieve double-digit growth, which is a basis for rising dividend payments. The wise approach to AMAT shares in motley-styled AI-related portfolios probably lies in putting an automatic "stop profit" orders to the levels, which are just a little below $190, while keeping in mind a range between $225 and $235 as a potential target area for a profit taking, if such price levels would be available before mid-May.
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