ACM Research (ACMR) remains a compelling semiconductor stock despite the headwinds from President Trump’s “Liberation Day” tariffs, which hit on April 2 with a 10% baseline on all imports and up to 54% on China.

While the market reels – down 17% from its February peak – ACMR’s unique position, growth trajectory, and tariff resilience make it a standout buy for investors seeking value in chaos.

A Singular Opportunity Amid Trade Turmoil
ACMR specializes in wet processing equipment for semiconductor manufacturing, a niche critical to chip production. Fourth-quarter revenue soared 43% to $170 million, with earnings of $0.35 per share beating estimates by $0.10. This growth stems from booming demand for its Ultra C Tahoe cleaning tools, used by foundries like Taiwan Semiconductor Manufacturing (TSM) and China’s Semiconductor Manufacturing International.

Unlike Nvidia (NVDA), which was slammed by GPU tariff fears, ACMR’s tools are capital equipment, less directly hit by the semiconductor import carve-out Trump hinted at. More importantly, its business is primarily in China, which represents 85% of revenue. That might seem a liability with 54% tariffs looming, but ACMR’s Shanghai base and local production capabilities sidestep import duties, turning a global trade war into a domestic advantage.

Valuation bolsters the bullish thesis. At $20.30 per share, ACMR trades at a P/E of 13 – dirt cheap compared to the semiconductor equipment industry’s P/E of 25. Kerrisdale Capital’s February call dubbed ACM Research a “10-bagger,” citing its 1.1x revenue multiple for 2025 against peers at 3x to 5x. The stock is still up 34% year-to-date, reflecting this optimism, yet it is still 39% below its 52-week high. The dip in its stock offers an opportunity to buy-in at a discount.

Tariff-Resistant, Not Risk-Free

Now, tariffs could disrupt its supply chains, but ACMR’s focus on China’s $100 billion chip self-sufficiency push insulates it. Beijing’s subsidies and SMIC’s expansion, which targets 5 nanometer chips by 2026, fuels demand for ACMR’s tools that are unaffected by U.S. import rules.

It gives ACM a tariff-proof edge as U.S. rivals like Applied Materials (AMAT) face higher costs sourcing abroad. Even if retaliatory tariffs hit, ACMR’s $1.2 billion backlog (though it says it doesn’t think that’s a useful barometer of future revenue) and 30% projected 2025 growth signal long-term resilience.

Risks linger, of course. China’s economic slowdown or U.S. export curbs could pinch growth, but ACMR’s $450 million cash pile and $106 million in long-term borrowings, along with and 50% gross margins provide a buffer.

Its small-cap status with a $1.3 billion market cap also adds volatility, yet that’s offset by its outsized role in a $697 billion semiconductor market racing to $1 trillion by 2030. Unlike consumer-facing stocks battered by tariff inflation, ACMR serves an industrial base with inelastic demand.

Key Takeaways
In a market crash, growth at a discount is gold. ACMR blends defensive positioning due to its China focus and tariff-shielded market, giving it significant upside potential from AI-driven chip demand.

While the Dow Jones Industrial Average shed 3,900 points in two days, ACMR’s fundamentals underscore the opportunity. It’s not just surviving tariffs, but thriving despite them. It makes ACM Research a semiconductor gem worth grabbing now.

— Rich Duprey

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Source: Money Morning