Remember when everyone was obsessing over ChatGPT and wondering which stocks would actually make money from the AI craze? Well, plot twist: it might not be the flashy AI companies everyone’s talking about. It’s the boring memory chip folks who are quietly becoming the real winners.
Applied Materials (AMAT) just dropped earnings that had investors doing happy dances in after-hours trading – the stock jumped 12% because apparently, making the tools that make memory chips is a pretty sweet gig right now.
The Numbers That Actually Matter
AMAT pulled in $7.01 billion in revenue and beat earnings expectations with $2.38 per share. But here’s the kicker – they’re projecting $7.65 billion for next quarter, which is like showing up to a potluck and bringing way more food than anyone expected.
The real story? Memory chips are in shorter supply than concert tickets for your favorite band. Data centers are hogging up to 70% of all memory chips produced, and everyone’s scrambling to get their hands on high-bandwidth memory (HBM) – the fancy stuff that makes AI actually work.
Why Your Phone Might Cost More Soon
Here’s where it gets interesting (and slightly annoying for regular humans). Memory chip makers like Micron, Samsung, and SK Hynix have basically said “sorry, not sorry” to smartphone and PC makers because they can make 50% more selling to AI companies.
It’s like if your local pizza place suddenly discovered they could charge tech bros double for the same pizza, so now everyone else has to wait longer and pay more. Except instead of pizza, it’s the memory that makes your devices work.
SK Hynix locked in deals with Nvidia at 50% higher prices, Samsung expects their memory profits to jump 422%, and Micron just reported record revenue of $13.64 billion. These companies have sold out their entire 2026 capacity – imagine being so popular you’re booked solid for the next year.
Where AMAT Fits In
Applied Materials is like the company that makes the ovens for all these pizza places. When everyone wants more pizza (memory chips), you need more ovens (AMAT’s equipment). They make the specialized tools for 3D chip stacking and advanced memory production – basically the fancy machinery that turns silicon into the brains of AI.
The company expects over 20% growth in their semiconductor equipment business through 2027, which in corporate speak means “we’re going to be very busy and very profitable.”
The Bottom Line
AMAT stock is up 82% over the past year, but at a forward P/E of 39x, it’s not completely bonkers expensive for a company riding the AI wave. The memory shortage isn’t going anywhere soon – if anything, it’s getting worse as more companies jump on the AI bandwagon.
Sometimes the best way to profit from a gold rush isn’t to dig for gold – it’s to sell the shovels. In this case, AMAT is selling some pretty expensive, high-tech shovels to people mining digital gold.