Michael Sullivan
Corporate Vice President of Investor Relations

Hello, and welcome back to the Applied Materials Master Class series. Several years ago, we anticipated that the AI wave would drive the semiconductor industry to $1 trillion in annual sales by 2030. And through that time, we modeled the wafer fab equipment market composition to be around 1/3 leading-edge, foundry-logic, 1/3 ICAPS and 1/3 memory, with memory evenly divided between DRAM and NAND.

Today, we see AI driving the semiconductor industry to around $1 trillion this year and new incremental applications like agentic, edge and physical AI growing the industry to much higher levels over the next several years. These AI waves are fueling demand for faster, more energy-efficient chips and systems, and this is creating a new WFE spending mix.

We now expect leading-edge, foundry-logic to outgrow ICAPS and drive well over 50% of foundry-logic in the years ahead. And in memory, we expect DRAM WFE spending to be well over 2x NAND spending. Applied is well positioned for this new mix with the highest process equipment market share in leading-edge, foundry-logic, which we covered in our April master class as well as both DRAM and advanced packaging, which we’re covering today.

In a moment, Kevin Moraes will summarize our strategy and explain why DRAM and advanced packaging are growing with AI. Next, Sony Varghese will share the road map for both standard DRAMs and high-bandwidth memories. Then Jinho An will discuss how advanced packaging is enabling faster and more energy-efficient AI chips and systems. Next, Lior Engel will explain how we are bringing eBeam process control to advanced packaging. Finally, Kevin

Indian suppliers of T-shirts, bed linen and towels to global retailers such as Walmart Inc. are among this year’s biggest stock-market winners, with some investors betting the rally has further to run.

A Bloomberg-compiled equal-weight gauge of eight textile exporters has climbed more than 30% this year, compared with an 8% decline in benchmark NSE Nifty 50 Index, with the nation’s new trade deals and a friendlier tariff regime bolstering the industry’s competitiveness.

The sector “should see a re-rating as this is a real opportunity for Indian firms to grab market share,” said Pawan Bharaddia, co-founder and chief investment officer of Equitree Capital Advisors Pvt. SP Apparels Ltd., a supplier of garments to Tesco Plc, is a part of his portfolio. The stock has surged 60% this year.

India is set to implement its trade accord with the UK this month, is concluding one with the European Union, and is moving closer to a deal with the US, fueling optimism that these agreements will boost exports. At the same time, global brands are moving their sourcing away from China and a few Asian peers, creating opportunities for Indian exporters and manufacturers.

Textile companies are seen as among the biggest beneficiaries of these trade pacts. That optimism is also visible in institutional portfolios, with large investors including SBI Funds Management Ltd. and Quant Mutual Fund raising their stakes in textile firms in recent months.
Arvind Ltd., which counts global retailers including Gap Inc. among its clients, has surged 74% this year. Indo Count Industries Ltd., which supplies bed linen to Walmart Inc and Target Corp., has soared 54%.
“With global retailers improving order visibility and brands consolidating toward large compliant suppliers, major Indian textile exporters are well-positioned to capture disproportionate market share in the upcycle,” Motilal Oswal analysts wrote in a note last week.
Despite being one of the world’s largest producers, India accounts for only about 4% of the global trade in textiles and apparel. The government aims to expand the textile market to $350 billion by 2030, from an estimated $194 billion in fiscal year 2026.

Achieving that goal will require fresh investments in manufacturing capacity, particularly in garments, where India lacks enough large-scale exporters, according to Prerna Jhunjhunwala, an analyst at Elara Securities India.

“Future gains will depend on companies expanding capacity, winning export orders and delivering sustained earnings growth,” said Jhunjhunwala, who holds buy recommendations on KPR Mill Ltd. and Arvind Ltd., and is among the top rated analysts for the sector.

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of NVDA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Tesla Inc. shares fell more than 6% to trade around $396 Thursday despite the electric vehicle maker reporting stronger-than-expected vehicle deliveries for the second quarter, highlighting investor focus on the pace of autonomous driving progress and profitability amid heavy spending on artificial intelligence initiatives.

The company delivered 480,126 vehicles in the April-June period, surpassing analyst expectations and marking a significant rebound from prior quarters. Production exceeded 450,000 units, with energy storage deployments reaching 13.5 gigawatt-hours, demonstrating operational strength across multiple segments.

Deliveries benefited from recovering demand in Europe and steady performance in other international markets, though North American sales faced headwinds. The results provide a positive data point ahead of Tesla’s full quarterly earnings later this month, where margins, capital expenditure and future guidance will face greater scrutiny.

Tesla’s Robotaxi ambitions remain central to its valuation narrative. The company has begun unsupervised operations in limited areas of Austin, Texas, with plans for broader expansion. Progress on Full Self-Driving software continues, though regulatory approvals and safety validations will determine commercialization timelines.

Chief Executive Elon Musk has emphasized artificial intelligence and autonomy as core to Tesla’s future, positioning the company beyond traditional automotive manufacturing. Investments in data centers, computing infrastructure and robotics underscore this strategic direction.

Delivery Rebound and Operational Highlights

Second-quarter deliveries exceeded the Wall Street consensus of approximately 397,000 to 406,000 vehicles. The beat reflects improved supply chain dynamics, new model refreshes and marketing efforts to stimulate demand.

Model 3 and Model Y continued dominating sales volumes, while Cybertruck production ramped steadily. Energy storage growth highlighted diversification beyond vehicles, with Megapack deployments supporting grid stability projects worldwide.

Tesla’s Shanghai factory and other international facilities contributed meaningfully to output. The company maintains flexibility to adjust production based on regional demand patterns.

Analysts expect second-quarter revenue and profit figures to reflect higher vehicle volumes, though increased competition and pricing pressures may affect average selling prices. Cost reductions through manufacturing efficiencies remain a key focus.

Autonomy and AI Investments

Tesla’s Full Self-Driving software has received regulatory nods in additional markets, enabling supervised and unsupervised testing. The Cybercab robotaxi vehicle, designed without steering wheel or pedals, represents the company’s vision for dedicated autonomous fleets.

Unsupervised operations in Austin mark a milestone, though scaling to profitable ride-hailing networks requires overcoming technical, regulatory and public acceptance hurdles. Competitors including Waymo and others have established operations in select cities.

Capital spending remains elevated as Tesla builds AI training infrastructure and expands manufacturing capacity. The company has committed billions toward these initiatives, betting on long-term leadership in autonomous technology.

Musk has repeatedly highlighted the transformative potential of robotaxis, projecting significant revenue contributions in coming years. Skeptics point to historical delays in meeting ambitious timelines for Full Self-Driving capabilities.

Market Position and Challenges

Tesla maintains leadership in the global electric vehicle market despite intensifying competition from legacy automakers and Chinese manufacturers. Pricing strategies and technology differentiation help sustain demand.

The company’s energy business, including solar and storage, provides a hedge against automotive cyclicality. Virtual power plants and grid services represent growing opportunities as renewable energy adoption accelerates.

Regulatory environments vary globally, with incentives for electric vehicles supporting sales in Europe and parts of Asia while policy shifts in the United States create uncertainty. Trade tensions and tariffs impact supply chains and costs.

Tesla’s valuation reflects expectations for growth beyond vehicles into software, energy and robotics. High multiples leave limited room for execution shortfalls, contributing to stock volatility.

Outlook and Investor Sentiment

Wall Street analysts maintain a range of views, with bulls citing robotaxi potential and bears emphasizing near-term margin pressures and competition. Consensus price targets suggest moderate upside from current levels, though forecasts vary widely.

Second-quarter earnings, scheduled for late July, will provide updates on profitability, cash flow and forward guidance. Delivery numbers offer an early positive indicator, but operational metrics will determine market reaction.

Tesla continues expanding its Supercharger network and exploring new vehicle platforms to address different market segments. Software updates regularly enhance existing vehicle capabilities, supporting customer satisfaction and residual values.

The company’s gigafactories in multiple continents support production scalability while mitigating regional risks. Vertical integration in battery technology provides competitive advantages in cost and performance.

As Tesla navigates its transformation into an AI and robotics company, execution on autonomy milestones will heavily influence investor confidence. The coming months will test the company’s ability to convert technological progress into sustainable financial returns.

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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Top car making groups point to challenges facing the sector

A key voice in the region’s automotive sector has called for decisive action from Government to support a “strategic national asset”.

Amid widespread anxiety in the industry about the impact of the Zero Emission Vehicle mandate, the North East Automotive Alliance’s CEO Paul Butler has said policymakers must address EV sales rules, energy supply and the country’s trading relationship with the EU. The call from the North East cluster – which is said to be the largest in the country and is home to embattled Nissan – echoes similar announcements at a national level.

Mr Butler said : “The NEAA supports industry calls for decisive action to review the ZEV Mandate, to secure a sustainable long-term trading relationship with the EU, to address industrial energy costs and accelerate delivery of the Industrial Strategy. Getting these fundamentals right is critical to protecting jobs, attracting investment, growing exports, and ensuring the North East and wider UK remains a world-leading location for automotive manufacturing and innovation”.

The NEAA has said the North East is in prime position to lead the country’s transition to electrification, but says the move can only be capitalise upon if an investment friendly and competitive environment is cultivated. Its call follows the results of a major, national-level survey of sector leaders conducted by the Society of Motor Manufacturers and Traders (SMMT), identifying barriers that Government must tackle.

Those issues include the ZEV Mandate, securing fair UK-EU trade, and cutting the underlying energy and business costs that shape investment decisions. ZEV is seen as the most pressing of those challenges, and is said to be forcing manufacturers, like Nissan, to subsidise the market at unsustainable levels because demand is below the trajectory needed to meet 2030 targets.

Pressure from the rules is likely to increase in January next year when annual targets rise to 38% for battery electric vehicle sales for cars and 34% for vans. Current market share is about 24% for cars and 9.5% for vans. The SMMT says brands have already spent more than £12bn on discounts – money they say could otherwise have supported new models, jobs and investment.

In addition to growing employment and energy costs, the group underscored the threat posed by the European Commission’s ‘Made in Europe’ rules which effectively makes UK automotive products uncompetitive in the majority of the European market unless the EU agrees to UK products being recognised as “assembled in the EU”. And, early next year, tightened up rules of origin under the EU-UK Trade and Cooperation Agreement will trigger a 10% tariff on 70% of battery electric and plug-in hybrid models sold in Europe.

Mike Hawes, SMMT chief executive, said: “UK Automotive can drive growth, innovation and net zero, but only if the right decisions are taken now. The Industrial Strategy sets out a plan, but delivery is now what matters.

“We need open trade with Europe, competitive conditions at home, and a realistic route to grow zero emission vehicle uptake. Reforming the ZEV Mandate is not about weakening ambition; it is about making the transition achievable, protecting investment and ensuring the UK remains a place where automotive businesses can build, sell, export and grow. The window for action is closing, which means we cannot wait for lengthy discussions.”

The dominance of the Magnificent Seven technology stocks (Apple, Microsoft, Alphabet, Amazon, Meta Platforms, Nvidia and Tesla) is facing its biggest test since the artificial intelligence rally began. After leading global markets for nearly three years, the world’s largest technology companies are now underperforming as investors question whether the enormous amounts they are spending on AI will generate enough returns.

The shift has become visible in recent weeks. According to deVere Group, nearly $2.3 trillion has been wiped off the combined market value of the Magnificent Seven during June.

The correction comes after a strong run that was driven by expectations that AI would transform the technology industry and create a new wave of corporate profits. That optimism is now giving way to a more cautious approach as investors wait for evidence that the spending is translating into higher earnings.

The upcoming June-quarter earnings season is expected to be an important test for the sector.

Nigel Green, chief executive of deVere Group, said markets are entering a more demanding phase for AI investments.

The Pakistan connection that helped Donald Trump make $1.4 billion crypto jackpot”The easy phase of the AI investment story is over. Investors were willing to support massive spending when expectations were high and stock prices kept rising. Now they want proof that these investments will deliver returns,” he said.
The biggest concern is the scale of spending. Microsoft, Amazon, Alphabet and Meta are investing hundreds of billions of dollars in AI infrastructure, including data centres, advanced chips and cloud computing capacity. Instead of slowing, these investments continue to rise.
Reports suggest that spending by the largest technology companies on AI infrastructure could exceed 700 billion this year, around 70% higher than last year. This has started affecting free cash flow, as companies spend more cash on expansion instead of generating higher profits.

An Apollo Global Management presentation released in June points to the same trend. The report says investors are beginning to rotate away from companies with heavy capital expenditure towards businesses with stronger free cash flow. It also shows that free cash flow among hyperscalers has started declining while capital expenditure as a share of operating cash flow continues to rise.

The Magnificent Seven index has fallen more than 13% from its recent peak, while the broader S&P 500 and Nasdaq have seen much smaller declines. Investors who treated the seven companies as one trade are now beginning to differentiate between them based on business models, profitability and AI monetisation.

The pressure is not uniform across all seven stocks. Amazon, Microsoft, Alphabet and Meta are facing questions over whether their massive AI infrastructure spending will eventually produce enough revenue. Apple is dealing with rising memory and storage costs, which recently forced the company to increase prices on several products. Nvidia, despite remaining the biggest AI beneficiary so far, is also facing increasing competition in the semiconductor market.

At the same time, investors are shifting towards companies that supply the AI ecosystem rather than those building it. Chipmakers, memory manufacturers and computing infrastructure providers have continued to perform well even as the technology giants have struggled.

Green believes this reflects a broader change in investor thinking. “The companies supplying chips, memory and computing power are performing much better than those spending hundreds of billions building AI systems. Owning an AI strategy and owning the economics of AI are two different things,” he said.

The shift also reflects concerns over financing. With interest rates expected to remain elevated, borrowing to fund AI projects becomes more expensive. Several large technology companies are increasingly relying on debt markets despite holding significant cash reserves.

Reports suggest investors are no longer rewarding AI announcements alone. Instead, they want to see measurable revenue growth, expanding margins and improving cash generation.

Macquarie said in a recent strategy note that AI adoption continues to grow much faster than previous technology cycles. Annualised AI revenues are already estimated at around $175 billion, while investment in AI is expected to reach about $850 billion this year. The brokerage noted that adoption rates remain strong even though concerns over valuation and spending have increased.

Apollo also does not view the recent correction as the end of the AI cycle. Instead, it argues that markets are becoming more selective and placing greater emphasis on profitability rather than growth alone.

Green believes the biggest change will be in how investors view the Magnificent Seven. He expects the market to stop treating them as a single group and instead reward only those companies that successfully convert AI investments into sustained earnings growth.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)