Why Applied Materials Stock Gained 15% in September

What happened 

Semiconductor giant Applied Materials (NASDAQ: AMAT) jumped 15% last month, according to data provided by S&P Global Market Intelligence.

The increase sent the stock to a new high, with shares up 60% since the start of 2017.

So what

September's rally kicked into high gear late in the month following the company's annual investor meeting. During that presentation, executives put a few numbers behind the bullish outlook they've described in general terms in their last few quarterly reports.

Specifically, CEO Gary Dickerson and his management team believe the company can reach $4.5 billion in yearly revenue by 2020 in its services division, which translates into 15% compound annual growth over the next three years. Increasing demand for high-performance semiconductors will lead to sharp profit gains, too, with earnings per share improving to $5.08 in 2020, up from $1.75 per share in the most recent fiscal year.

"A.I. and big data are sparking a renaissance in chip design," Dickerson told investors. "These factors combined with the strength of our diverse portfolio give us confidence in our ability to deliver higher levels of profitable growth."

Now what

Applied Materials is targeting a 19% sales boost for its fiscal fourth quarter to mark a slight slowdown from last quarter's record growth result. Yet if it can advance toward those aggressive long-term growth targets, I'd expect the stock's rally to continue.

10 stocks we like better than Applied MaterialsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Applied Materials wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of September 5, 2017

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.