There have been fewer things more boring over the years than watching Applied Materials (AMAT) report. This semiconductor capital equipment juggernaut would rarely, if ever, beat or miss earnings in any material fashion. Orders would middle in between the regular ups and downs of the semi-cap equipment cycle and nobody would really notice -- Applied was just the core large-cap position in a diversified, index-tracking portfolio. A relatively stable store of value in a cyclical industry.
Today, though, Applied reported second-quarter fiscal 2016 orders and guided well above the Street for next quarter. Admittedly, it was the best number I have seen out of the company, well, ever.
In semi-cap equipment, there is an equipment transition within "3D NAND," which is industry speak for .... It requires big-chip producers such as Intel (INTC) and Micron Technology (MU) to spend more on tooling to answer complexity and density requirements as our devices become more complicated and power and bandwidth hungry. Applied is clearly taking market share.
In display, there is a transition to "OLED" in basically any consumer device we use. The transition from LCD is a very long-term growth driver for Applied.
This comes just when everybody, including me, was wondering when semiconductor sales would turn. It has been a dismal couple of quarters for the big-device guys in an "in between product cycle" moment. Apple (AAPL), Samsung and basically everyone else has ratcheted down inventory and demand schedules in the near term.
And then here comes Applied, the semi-cap behemoth, telling us that the big guys are starting to spend big on next-level technology. Thank you Applied, for the reminder!
Spending on semi-equipment and development of more complicated chips will lead to exciting new products for consumers and businesses in the not-so-distant future.
It is amazing how far Moore's Law can be extended.