Applied Materials' (AMAT +6.3%) FQ4 guidance demonstrates its business is less cyclical than that of rivals KLA-Tencor (KLAC +1.4%) and Lam Research (LRCX +1.5%), argues Nomura. Whereas AMAT is guiding for flat Q/Q Oct. quarter revenue, KLA and Lam (more dependent on big foundry orders) are respectively forecasting 16% and 8% drops before expected rebounds.
Nomura is also a fan of AMAT's strong Chinese display equipment exposure, and notes overlap with merger partner Tokyo Electron's (OTCPK:TOELF +5%) display ops is low.
Jefferies echoes Lam Research's management (previous) by predicting technology inflections such as "a faster-than-expected 14nm FinFET ramp and a shift to flexible OLED by Samsung" will act as catalysts for AMAT over the next 6-18 months.
Credit Suisse is more cautious: It likes AMAT's margin improvement, share gains, and exposure to display/solar recoveries, but also considers Lam a better play on investments in FinFET (3D transistors), multi-patterning, and 3D NAND flash. AMAT gets ~40% of its chip equipment revenue from chemical vapor deposition and etching products (account for a large portion of spending on cutting-edge processes), while Lam gets ~90%.