Applied Materials, Inc (NASDAQ:AMAT) flies under the radar of most investors because people usually stop looking when they run across the chip stocks with big names such as Intel Corporation (NASDAQ:INTC), Texas Instruments Incorporated (NASDAQ:TXN) or QUALCOMM, Inc. (NASDAQ:QCOM).

The thing is, AMAT works with all of them, and more. AMAT sells the tools and equipment needed to make state-of-the-art chips. The company also designs automation software and makes components for the solar industry and display technologies.

All of its products and services are buried, as most consumers simply assume the brand names with which they’re familiar are the ones that also built the chips with their own set of products and components.

But, that isn’t the case. AMAT is a $48 billion (by market cap) company that is growing by leaps and bounds because chips are no longer just found in personal computers and web servers.

Nowadays, chips are embedded in everything from cars to washing machines. This proliferation of “smart” machines also means a proliferation of semiconductors to make those electronic brains work.

And, unlike in the past — when you could predict sales of chips based on computer demand — chips are now an essential part of almost every market. The best thing about AMAT is that you don’t have to buy a chipmaker and hope it lands the best contracts, or that its next-generation chip succeeds in the marketplace. AMAT wins regardless.

What This Means for AMAT Stock

The strength and stability of AMAT stock is evident by its most recent second-quarter earnings report. Earnings per share was up a stunning 129% year over year. Revenue was up 45% over the same period. Impressive numbers to be sure, but the most impressive part of the report is the fact that AMAT has been blowing past consensus estimates for the past six quarters straight.

What’s more, management guided higher for the next quarter as well — consensus estimates for Q3 earnings are 69 cents per share, yet AMAT is now expecting 79–89 cents per share.

Given this consistent outperformance, you might expect AMAT stock to be trading at an outrageous premium, but you would be wrong. AMAT is trading at a PE of 18 and is up 38% year to date.

That’s a lower PE than TXN and QCOM, and only slightly higher than INTC. But, the fact is AMAT is not a chip company; it builds the products that chip companies use, so it’s not locked into the same commodity model that chipmakers have to deal with.

Further, none of this even takes into account the company’s display and solar business sectors, which are both actively growing. Visual computing is showing in cars and the virtual reality and augmented reality booms have barely started.

Renewable energy continues to expand, especially solar, and a new generation of photovoltaic cells are making it a more viable choice for an increasing number of customers. These types of next-gen technology improvements will serve to even further strengthen AMAT stock.

To be clear, AMAT is not a fad stock. In fact, the company is in the middle of some of the biggest trends in the economy today, and will be for at least the next decade.