Applied Materials (NASDAQ:AMAT) hopes to accelerate semiconductor manufacturing by building a new research center in Silicon Valley. The move comes amid escalating tensions between the U.S. and China after the latter banned its key infrastructure operators from buying Micron’s (MU) products.
Applied will invest about $4 billion in the facility, which is expected to be operational in early 2026. The new research center will provide close to 2,000 engineering jobs. The CHIPS and Science Act, approved last year to encourage U.S. chip production, is expected to provide help for the firm.
Applied already operates two innovation hubs in California and New York. These centers are dedicated to advanced chip-making and innovation in materials engineering R&D. With the third facility, the company plans rapid development of new production techniques.
The company plans to collaborate with other chip makers, such as Intel (INTC) and Taiwan Semiconductor (TSM), along with several universities, to conduct research and experiment with its equipment at the facility.
Applied anticipates that the new facility will boost innovation and lower the cost of commercializing new technologies in the future.
Analyst Ratings Following Q2 Earnings
Following the company’s better-than-expected results for the second quarter of Fiscal Year 2023, seven analysts reaffirmed their Buy rating on AMAT stock. Simultaneously, two analysts maintained their Hold rating while one rated the stock a Sell.
Among the bullish analysts, analyst Krish Sankar from TD Cowen said that the company has the potential to outperform its competitors in 2023 with support from strong momentum in its IoT, Communications, Automotive, Power, and Sensors (ICAP) unit.
Is Applied Materials a Buy?
Turning to Wall Street, AMAT stock is a Moderate Buy based on 16 Buy, four Hold, and one Sell ratings. The average analyst price target is $137.77, implying 7.3% upside potential. The stock has gained 31% year-to-date.
As per TipRanks data, the most accurate analyst for Applied is Goldman Sachs analyst Toshiya Hari. Copying the analyst’s trades on this stock and holding each position for one year could result in 89% of your transactions generating a profit, with an average return of 35.72% per trade. Importantly, the analyst reaffirmed his Buy rating on AMAT stock about five days ago.