Applied Materials (AMAT.US) has become the top choice for many analysts, optimistic about the early stage of AI and data center construction.

The largest chip manufacturing equipment manufacturer in the United States, Applied Materials (AMAT.US), has become the top pick for several analysts, who believe the company will continue to benefit from AI and data center construction. Analyst Jordan Brazeck said that data centers currently consume about 4% of the total U.S. Energy Corp. supply, a number expected to rise to 12% by 2028. He believes that AI and data center construction are still in the early stages, and Applied Materials, Inc. is one of his top stock picks. Brazeck stated, "We are in the very, very early days of this AI revolution, with capital expenditures being front-loaded. Therefore, considering data center construction, a large portion of expenditures will be invested upfront, but in the next two to three decades, you will see AI rising in various economic sectors. So I think this early scale of capital expenditure is reasonable. In the short term, there may be some fluctuations and volatility in the market, but in the long term, unlike the infrastructure construction during the internet bubble era, the current rapid momentum of AI development is consuming all these capital expenditures very, very quickly. The real bottleneck will not be capital expenditures but energy." Investment firm Heartland Opportunistic Value Equity Strategy stated, "This quarter, we have established a position in Applied Materials. The company is the largest and most diversified capital equipment, service, and solutions provider in the semiconductor manufacturing sector. As a major supplier of wafer manufacturing equipment, the company has a 21% market share, which is the result of its decades of organic and inorganic growth. In the critical deposition process that requires a high level of precision and is essential to the manufacturing process, Applied Materials is a global leader, using processes to attach thin films to wafer surfaces at the atomic level to give them electrical properties. We took advantage of the cyclical downturn in the semiconductor industry to buy near our downside target price. Insider buying, notably CEO Gary Dickerson spending $7 million to buy shares at the beginning of April, further strengthened our confidence." The company believes that Applied Materials will benefit from several tailwinds, including increased demand for advanced packaging and complex manufacturing processes driven by rising chip architecture complexity. This will boost wafer manufacturing equipment spending and make Applied Materials a long-term beneficiary. These tailwinds, combined with its position as a top analog semiconductor manufacturer, should lead to a re-rating of the stock. Based on its price-earnings ratio, calculated based on mid-term earnings per share, Applied Materials' stock price could reach the low $300 range, representing a significant increase from its current price of around $170.