Amtech Systems ASYS shares have slid 16.9% over the past six months, underperforming the broader Zacks Computer and Technology sector’s 1.3% decline and the Zacks Semiconductor - General industry’s 1% drop.

ASYS has also lagged industry peers such as Intel INTC, NVIDIA NVDA and Texas Instruments TXN. While Intel shares gained 1.2%, NVIDIA and Texas Instruments shares have fallen 0.6% and 12.1%, respectively.

This underperformance raises the question on whether investors should cut their losses and exit or if it is a golden buying opportunity. While the near-term headwinds are real, the long-term growth story for Amtech remains intact, making a strong case for buying the stock.

Why Did Amtech Struggle?

The AMAT stock’s underperformance stems from a mix of broader market weakness and company-specific concerns. A widespread sell-off in tech stocks, triggered by fears of escalating trade tensions and slowing economic growth, has put pressure on the entire sector.

Talking about company-specific challenges, the prolonged weakness in the automotive market is significantly impacting Amtech’s equipment-related sales. Also, the mature node semiconductor production market, which Amtech serves, continues to face muted demand. The company’s revenues declined 2% year over year to $24.4 million in the first quarter of fiscal 2025.

ASYS is also suffering from macroeconomic challenges like protracted inflationary conditions and high interest rates, which are forcing its enterprise customers to delay their orders. These factors have weighed on investors’ sentiments.

However, Amtech has made significant strides in restructuring initiatives and cost optimization to align with market conditions. The company is capitalizing on emerging opportunities in advanced packaging, which is driving increased demand for capital equipment. These strategic initiatives, combined with favorable industry trends, position Amtech for sustained growth and long-term value creation.

Advanced Packaging Strengthens ASYS’s Outlook

The long-term prospects for the advanced semiconductor packaging industry remain strong, with growing momentum in the sector serving as a tailwind for capital equipment demand. According to a Mordor Intelligence report, the advanced packaging market is estimated to reach $47.98 billion by 2030 from the projection of $34.8 billion for 2025, seeing a CAGR of 6.63%.

Amtech has identified advanced packaging as a significant growth opportunity, particularly within artificial intelligence (AI) infrastructure. In the first quarter of fiscal 2025, the company observed a strengthening demand for its reflow equipment in advanced packaging applications, particularly within AI infrastructure. This uptick in demand is expected to serve as a growth catalyst.

In alignment with this positive momentum, Amtech projected revenues of $21-$23 million for the second quarter of fiscal 2025. This outlook reflects the company's confidence in sustaining growth, driven by ongoing investments in AI-related packaging and thermal management solutions.

Restructuring Efforts to Boost Amtech’s Profitability

Amtech has restructured its operations to increase cost efficiency and improve its ability to adapt to market demands, resulting in tangible results. These efforts have resulted in more than $8 million in annualized cost savings to date, with projections to reach $9 million by the end of the second quarter of fiscal 2025. A key component of this strategy includes the adoption of a semi-fabless manufacturing model, which has effectively reduced fixed costs and improved operating leverage.

ASYS continues to pursue supply chain optimization initiatives, identifying opportunities to significantly reduce input costs through better sourcing practices. The company is also working on footprint utilization improvements to reduce fixed costs by freeing up space and increasing operational efficiency.

Over the past several quarters, pricing actions have been implemented to counter inflationary pressures and enhance the product margin profile. The company is also optimistic about completing the shipment of the majority of its low-price and low-margin businesses in its backlog by the end of the fiscal second quarter. That means its margins will improve significantly in subsequent quarters. Moving forward, ASYS is planning to remain vigilant and continuously adjust pricing to sustain profitability.

These ongoing efforts are expected to strengthen Amtech’s financial resilience, enabling it to generate profits even during cyclical downturns.

Conclusion: Buy ASYS Stock Now

Amtech is well-positioned for growth, driven by rising demand for advanced packaging and capital equipment. Strategic investments and market tailwinds support its long-term potential. With strong fundamentals and a favorable industry outlook, ASYS presents a compelling buying opportunity for investors.

Amtech currently sports a Zacks Rank #1 (Strong Buy) and has a Growth Score of A — a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology.

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

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

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