With the rise of artificial intelligence (AI), NVIDIA Corporation NVDA has experienced significant growth. Demand for its graphics processing units (GPUs) for powering new AI applications has increased among leading tech companies, while its cutting-edge Blackwell chips are also seeing exceptionally strong demand.\u00a0<\/p>\n
However, in the first quarter of 2026, NVIDIA\u2019s shares declined by over 5% amid geopolitical shocks that dented investors\u2019 sentiment. Apprehensions emerged that a possible slowdown in AI infrastructure spending could derail the company\u2019s growth trajectory, while stiff competition from rivals such as Advanced Micro Devices, Inc. AMD and Arm Holdings plc ARM raised concerns about potential pressure on its market share. <\/p>\n
But \u201cpick-and-shovel\u201d AI players Applied Materials, Inc. AMAT and Lam Research Corporation LRCX capitalized on the AI boom, rising 33% and 24.8%, respectively, in the first quarter \u2013 defying the broader downward trend in the tech sector. Both companies are now well-poised to replicate NVIDIA\u2019s long-term success, banking on a scalable business model. Let\u2019s see in detail \u2013 <\/p>\n
Applied Materials Leads in AI-Driven Semiconductor Growth\u00a0<\/p>\n
Increasing AI investments are boosting sales of Applied Materials\u2019 state-of-the-art semiconductor equipment. Gary Dickerson, President and CEO of Applied Materials, said that the company leads in high-performance, energy-efficient chip equipment, and is targeting 20%+ growth this year. The company has already bolstered its supply chain and improved manufacturing capacity to meet growing demand. <\/p>\n
Applied Materials expects revenues for the second quarter of fiscal 2026 to come at $7.65 billion, with a range of plus or minus $500 million, building on first-quarter revenues of $7.01 billion for the period ending on Jan. 25, 2026. This indicates sustained growth momentum, according to ir.appliedmaterials.com.\u00a0<\/p>\n
Applied Materials stayed highly profitable, with a non-GAAP gross margin of 49.1% in the fiscal first quarter, and generated $1.69 billion in cash from operations, which can fund further growth initiatives. The company earned innovation and technology leadership awards, highlighting customer trust, and continues to benefit from long-term secular trends in the semiconductor industry.\u00a0<\/p>\n
As a result, the Applied Materials\u2019 expected earnings growth rate for the current and next year are 17.8% and 26.4%, respectively. The Zacks Consensus Estimate of $11.1 for AMAT\u2019s earnings per share (EPS) is up 12.1% year over year.<\/p>\n
Lam Research Set to Gain From Memory Chip Growth\u00a0<\/p>\n
Lam Research is well-positioned for sustained growth, supported by its expanding product offerings. The company has guided for solid margins, an increase in earnings, and healthy revenues of around $5.7 billion for the March 2026 quarter, according to newsroom.lamresearch.com.\u00a0<\/p>\n
Lam Research ended 2025 on an encouraging note, with revenues for the December quarter coming in at $5.34 billion, with a non-GAAP gross margin of 49.7%. Strong operational execution helped fuel net income to $1.59 billion, highlighting solid profitability. <\/p>\n
Meanwhile, rising investments in equipment to expand memory chip production by the likes of Micron Technology, Inc. MU are likely to benefit leading semiconductor equipment provider Lam Research. Consequently, the company\u2019s expected earnings growth rate for the current and next year are 26.6% and 26.9%, respectively. The Zacks Consensus Estimate of $5.24 for LRCX\u2019s EPS is up 32.3% year over year (read more: Up 15%+ in Q1: 2 AI Stocks Still Flashing “Strong Buy” for Q2).<\/p>\n
While Applied Materials has a Zacks Rank #2 (Buy), Lam Research has a Zacks Rank #1 (Strong Buy). You can see the complete list of today\u2019s Zacks Rank #1 stocks here.<\/p>\n
Beyond Nvidia: AI’s Second Wave Is Here<\/p>\n
The AI revolution has already minted millionaires. But the stocks everyone knows about aren’t likely to keep delivering the biggest profits. Little-known AI firms tackling the world’s biggest problems may be more lucrative in the coming months and years.See<\/p>\n
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report<\/p>\n
Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report<\/p>\n
Micron Technology, Inc. (MU): Free Stock Analysis Report<\/p>\n
NVIDIA Corporation (NVDA): Free Stock Analysis Report<\/p>\n
Lam Research Corporation (LRCX): Free Stock Analysis Report<\/p>\n
Applied Materials, Inc. (AMAT): Free Stock Analysis Report<\/p>\n
ARM Holdings PLC Sponsored ADR (ARM): Free Stock Analysis Report<\/p>\n
This article originally published on Zacks Investment Research (zacks.com).<\/p>\n
Zacks Investment Research<\/p>\n","protected":false},"excerpt":{"rendered":"With the rise of artificial intelligence (AI), NVIDIA Corporation NVDA has experienced significant growth. Demand for its graphics…\n","protected":false},"author":2,"featured_media":82783,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[345,343,344,85,46,125],"class_list":{"0":"post-372832","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-il","12":"tag-israel","13":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/372832","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=372832"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/372832\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/82783"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=372832"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=372832"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=372832"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}