Applied Materials (AP2.DE) Stock Analysis & Winston Score

Applied Materials makes the machines that build computer chips. Semiconductor manufacturers like TSMC, Samsung, and Intel use its equipment to deposit, etch, and inspect the tiny layers that make up modern chips. It is one of the largest semiconductor equipment companies in the world, supplying tools used in nearly every advanced chip made today. The company earns money by selling equipment to chipmakers, and then generates recurring revenue through parts, service contracts, and software that keep those machines running. Applied Materials operates globally, with a large share of sales coming from Asia, particularly Taiwan, South Korea, and China. Its deep customer relationships and the high cost of switching to a competitor's tools give it a durable competitive position. The biggest risk it faces is exposure to China, which accounts for roughly a quarter of revenue and is subject to tightening U.S. export restrictions on advanced chip technology.