Why Applied Materials (AMAT) Could Be a Major Winner of the AI Memory Surge

Why Applied Materials (AMAT) Could Be a Major Winner of the AI Memory Surge

Mon, August 17, 2026 at 10:47 PM GMT+3 3 min read

• AMAT -3.92%

Aristotle Capital Management, LLC, an investment management company, released its "Core Equity Fund" Q2 2026 investor letter. A copy of the letter can be downloaded here. The fund returned 14.69% in the second quarter of 2026, slightly trailing the 15.20% gain of the S&P 500 Index as market performance remained highly concentrated in artificial intelligence (AI)-related companies. The quarter was marked by strong equity market gains, with the S&P 500 reaching new record highs, while the Bloomberg U.S. Aggregate Bond Index advanced 0.67%. Economic conditions remained resilient, with unemployment at 4.2%, inflation easing to 3.5% year-over-year in June from 4.2% in May, and real GDP growth accelerating. The fund noted that AI-driven investment in semiconductors, memory, and data-center infrastructure continued to dominate market returns, creating significant performance dispersion across sectors. During the quarter, the managers increased exposure to areas benefiting from the AI infrastructure buildout and broader computing demand while reducing positions where growth prospects and valuation support appeared less compelling. Looking ahead, the fund remains constructive on equities, citing continued earnings growth, reasonable forward valuations, and long-term opportunities tied to AI, cloud computing, semiconductor demand, and other secular growth trends, although geopolitical tensions, persistent inflation, and the possibility of future Federal Reserve rate hikes remain key risks. In addition, please check the Fund's top five holdings to know its best picks in 2026.

In its second-quarter 2026 investor letter, Aristotle Capital Management's Core Equity Fund highlighted stocks like Applied Materials, Inc. (NASDAQ:AMAT). Applied Materials, Inc. (NASDAQ:AMAT) is a semiconductor equipment company that supplies manufacturing systems and services used to produce advanced chips and electronic displays. The one-month return of Applied Materials, Inc. (NASDAQ:AMAT) was 1.81% while its shares traded between $154.47 and $739.67 over the last 52 weeks. On August 14, 2026, Applied Materials, Inc. (NASDAQ:AMAT) stock closed at approximately $507.18 per share, with a market capitalization of about $425.17 billion.

Aristotle Capital Management's Core Equity Fund stated the following regarding Applied Materials, Inc. (NASDAQ:AMAT) in its Q2 2026 investor letter:

"Applied Materials contributed to performance in the second quarter following strong quarterly results and significant customer announcements that reinforced the multi-year growth demand outlook from AI compute and infrastructure, particularly the memory upcycle leveraged to AI and high-bandwidth memory (HBM). The company's end-market exposure remains well positioned, with 80%+ of 2026 industry wafer fabrication equipment (WFE) growth expected fromleading-edge foundry/logic, dynamic random-access memory (DRAM) and advanced packaging, the three areas where Applied Materials is either leading or gaining share. In addition, management's outlook reinforced that customers continue to prioritize rapid capacity expansion, which was further supported by Samsung and SK Hynix announcing in June a $515-$518 billion capacity expansion plan aimed at doubling South Korea's DRAM output over the next five years. This capital expenditure (capex) announcement supports expectations for global WFE spend to grow from ~$145 billion in 2026 to ~$250 billion by 2028".

For illustration purposes only. Photo from Pixabay/Pexels

Applied Materials, Inc. (NASDAQ:AMAT) is in 39th position on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. As per our database, 138 hedge fund portfolios held Applied Materials, Inc. (NASDAQ:AMAT) at the end of the first quarter, which was 111 in the previous quarter. While we acknowledge the risk and potential of Applied Materials, Inc. (NASDAQ:AMAT) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on thebest short-term AI stock.

In another article, we covered Applied Materials, Inc. (NASDAQ:AMAT) and shared Jim Cramer's views on the company. In addition, please check out our hedge fund investor letters Q1 2026 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.