Amtech Systems Sees 16.9% Decline Amid Market Challenges

Amtech Systems (ASYS) has experienced a 16.9% drop in its shares over the past six months. This decline is notably worse than the broader Zacks Computer and Technology sector, which fell by 1.3%, and the Zacks Semiconductor – General industry, which saw a 1% decrease.

The company has also underperformed against industry leaders like Intel (INTC), NVIDIA (NVDA), and Texas Instruments (TXN). While Intel’s shares increased by 1.2%, NVIDIA saw a slight decrease of 0.6%, and Texas Instruments reported a significant drop of 12.1%.

This performance prompts investors to ponder whether it’s time to sell or if a purchasing opportunity exists. Despite the immediate challenges Amtech faces, the long-term growth narrative remains strong, suggesting reasons to consider acquiring the stock.

Factors Behind Amtech’s Struggles

The recent underperformance of AMAT stock results from a combination of broader market struggles and specific corporate issues. A widespread tech stock sell-off, spurred by concerns over escalating trade tensions and faltering economic growth, has adversely affected the entire sector.

Amtech Systems, Inc. Price and Consensus

 

Amtech Systems, Inc. price-consensus-chart | Amtech Systems, Inc. Quote

On a company-specific level, the ongoing downturn in the automotive sector has heavily impacted Amtech’s equipment-related sales. Furthermore, the mature node semiconductor production market served by Amtech continues to experience low demand. In its first quarter of fiscal 2025, the company’s revenue fell 2% year over year to $24.4 million.

Macroeconomic factors like persistent inflation and elevated interest rates have delayed order placements from enterprise customers, adding to investor concerns.

However, Amtech is actively pursuing restructuring and cost optimization initiatives to align with market realities. The firm is also focusing on capitalizing on emerging opportunities in advanced packaging, which is driving demand for capital equipment. These strategic measures, coupled with favorable industry trends, position Amtech for long-term growth and value creation.

Positive Outlook for Advanced Packaging

The advanced semiconductor packaging industry’s long-term prospects look favorable, with sector momentum likely boosting capital equipment demand. A recent Mordor Intelligence report estimates that the advanced packaging market should grow from $34.8 billion in 2025 to $47.98 billion by 2030, reflecting a CAGR of 6.63%.

Amtech recognizes advanced packaging as a key growth driver, especially within the artificial intelligence (AI) infrastructure space. In the first quarter of fiscal 2025, the company noted an increase in demand for its reflow equipment related to advanced packaging applications, particularly those involving AI. This growing demand is expected to act as a catalyst for further growth.

In line with this positive momentum, Amtech forecasts revenues between $21-$23 million for the second quarter of fiscal 2025. This outlook indicates the company’s confidence in maintaining growth, fueled by ongoing investments in AI-oriented packaging and thermal management technologies.

Restructuring Efforts Aiming for Profitability

Amtech is reshaping its operations to enhance cost efficiency and adaptability to market conditions, yielding measurable results. The firm has achieved over $8 million in annualized cost savings so far, anticipating this will reach $9 million by the end of the second quarter of fiscal 2025. A major aspect of this strategy includes transitioning to a semi-fabless manufacturing model, effectively lowering fixed costs and improving operational leverage.

ASYS is also focused on supply chain optimization, identifying ways to reduce input costs through better sourcing practices. Additionally, the company is working on improving space utilization to cut fixed costs and amplify operational efficiency.

Pricing strategies have been employed to combat inflationary pressures and enhance profit margins. Furthermore, ASYS is optimistic about completing most shipments of low-price, low-margin products by the end of the fiscal second quarter, which is expected to lead to improved margins in the following quarters. Going forward, ASYS plans to remain vigilant and adjust pricing strategies to ensure sustained profitability.

These ongoing initiatives aim to reinforce Amtech’s financial stability, allowing it to remain profitable, even during cyclical downturns.

Conclusion: Consider Buying ASYS Stock

Amtech stands poised for growth, driven by an uptick in demand for advanced packaging and capital equipment. Strategic investments and favorable market trends bolster its long-term potential. With strong fundamentals and a positive industry outlook, ASYS presents a worthwhile buying opportunity for investors.

Currently, Amtech holds a Zacks Rank #1 (Strong Buy) and has a Growth Score of A, reflecting a robust investment opportunity according to Zacks’ proprietary methodology.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks Identifies Top Semiconductor Stock

This stock represents only 1/9,000th the size of NVIDIA, which has soared over +800% since our recommendation. Despite NVIDIA’s continued strength, our new top chip Stock has greater growth potential.

With robust earnings growth and an expanding customer base, it is well-positioned to meet the soaring demand for Artificial Intelligence, Machine Learning, and the Internet of Things. Global semiconductor manufacturing is projected to rise from $452 billion in 2021 to $803 billion by 2028.

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This article originally published on Zacks Investment Research (zacks.com).

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