Financial report outlook | Apple Inc. Intel Corporation trade offers "divine assistance", can Applied Materials' Q2 performance support the high valuation?

Application Materials (AMAT.US) is scheduled to release its second quarter earnings report on May 14 (Thursday). Currently, Wall Street holds a highly optimistic expectation for the performance growth of Application Materials, with the general belief that its earnings per share will fall in the range of $2.66 to $2.68 and revenue is expected to reach $7.83 billion. The company had previously provided a second quarter guidance range of revenue of $7.15 billion to $8.15 billion, with earnings per share between $2.44 and $2.84. As the company is at the top of the industry chain, its performance guidance not only concerns the reasonableness of its own valuation, but also directly reveals the capital expenditure intensity of giants such as Intel Corporation, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, in the next generation chip manufacturing field. The core focus of this quarter's financial report is the deep transmission of AI hardware dividends from logic chips to advanced packaging fields. With the outbreak of high-performance computing demanding high-bandwidth memory (HBM), the manufacturing focus of AI chips is no longer limited to process miniaturization, but rather on the complexity of heterogeneous integration. Market analysis points out that Application Materials has a very high market share in the advanced packaging equipment market, making it the biggest beneficiary of this wave of structural growth. Investors are closely monitoring the specific data on the growth rate of packaging business orders in the financial report to verify whether the AI wave has transformed from a single computing power outbreak to a continuous demand for manufacturing equipment, thereby bringing longer-term revenue momentum to the company. At the same time, the technological revolution in the semiconductor underlying architecture is providing new profit growth points for Application Materials. With giants like Intel Corporation, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR moving towards 2-nanometer and below processes, traditional transistor architectures are transitioning to full surround gate-all-around (GAA) architectures. Application Materials' management had previously revealed that the introduction of GAA technology will significantly increase equipment sales per wafer by about $1 billion. Therefore, the conversion speed of GAA-related orders in this quarter's report will be a key signal for measuring the company's profit certainty over the next two to three years. Combining the recent rumors of a $11 billion financing deal between Intel Corporation and Apollo Global Management Inc., Application Materials' order backlog in the high-end logic chip market is seen to have stronger financial guarantees. Analysts are optimistic about Application Materials' understanding of the chip expansion dividend. On the eve of the financial report, Seeking Alpha's senior columnist and macro analyst Jack Bowman wrote an article systematically reviewing the investment logic of Application Materials and gave a "buy" rating - although he admitted that the current price is high for individuals and prefers to enter after the stock price declines following the financial report. Bowman positions Application Materials as the "pick and shovel" in the semiconductor field - the one who sells shovels. He points out that the logic of Application Materials is consistent with ASML Holding NV ADR (ASML.US) that he has long held: not pursuing short-term stock price explosiveness, but pursuing long-term competitive ability. The key to investing in "pick and shovel" type of companies is not becoming the fastest-starting stock, but whether they can survive through cycles and last until the end.