Applied Materials Inc. (NASDAQ: AMAT) has been recognized as one of the top manufacturing stocks to buy in 2024, alongside other strong performers in the sector. The manufacturing industry, a fundamental part of the U.S. economy, plays a vital role in GDP, employment, and technological advancements. As of 2023, the U.S. manufacturing sector contributed $2.3 trillion to the nation’s GDP, representing 10.2% of the total. Additionally, as of January 2025, it provides jobs for approximately 12.76 million individuals, showcasing its enduring strength.
Reshoring and Strategic Shifts: A Major Trend
A key trend shaping the manufacturing landscape is the move towards reshoring—bringing manufacturing back to the U.S. As global supply chains have become increasingly vulnerable due to geopolitical tensions, such as Russia’s invasion of Ukraine and ongoing trade disputes with China, companies are reevaluating the risks of offshoring. This shift has been further accelerated by the decline in China’s factory activity and its economic slowdown.
The reshoring trend is particularly evident in the corporate earnings reports, with mentions of reshoring surging by 128% in the first quarter of 2023 compared to the previous year. This growing trend points to a strategic move by companies to reduce their dependence on foreign manufacturing hubs, enhancing the resilience of U.S. manufacturing.
Market Performance and Investment Trends
Despite challenges such as inflation and fluctuating interest rates, manufacturing stocks have demonstrated resilience in recent times. The sector has benefited from robust domestic demand and strategic investments in advanced technology. In 2024, the manufacturing sector saw a significant increase in corporate profits, reflecting a five-year compound annual growth rate (CAGR) of 11.1%, as noted by the National Institute of Standards and Technology (NIST). Additionally, the dispersion in asset prices across various sectors and regions has created strong opportunities for hedge funds, leading to promising performance in manufacturing stocks.
Outlook and Future Growth Prospects
The outlook for U.S. manufacturing remains cautiously optimistic, bolstered by innovation and supportive government policies. In January 2025, the manufacturing sector showed signs of recovery, expanding for the first time since 2022. The ISM manufacturing PMI rose to 50.9, the highest reading since September 2022, signaling positive momentum.
Applied Materials Inc. (AMAT): A Leading Player in Manufacturing
Among the top manufacturing stocks to watch is Applied Materials Inc. (AMAT), a leading player in the semiconductor manufacturing equipment sector. The company provides critical technology and materials used in the production of semiconductor chips, a vital component of modern electronics. With the global push for advanced technology and the increasing demand for semiconductors, AMAT is positioned well for continued growth.
Applied Materials’ solid market performance, strong leadership in semiconductor technology, and alignment with broader industry trends like reshoring and technological innovation make it a standout stock in the manufacturing sector.
Our Methodology for Selecting the Best Manufacturing Stocks
To identify the best manufacturing stocks, we analyzed Insider Monkey’s database of 900 hedge funds as of Q3 2024. Our focus was on companies across various sub-sectors, including industrial equipment, aerospace, automotive, and consumer goods. We ranked the stocks based on the number of hedge funds holding stakes in these companies, highlighting those with strong institutional backing.
Conclusion
With trends such as reshoring, increasing innovation, and a positive outlook for U.S. manufacturing, companies like Applied Materials Inc. (AMAT) are well-positioned to benefit. As the sector continues to grow and adapt, manufacturing stocks present solid investment opportunities for those looking to capitalize on the long-term potential of the U.S. economy.
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