The latter is the case if one considers, for example, the extraordinary growth boulevard theoretically offered by the development of artificial intelligence, and the resulting need for computing power. Applied operates in an oligopolistic market, with Lam Research, ASML and Tokyo Electron, and of course the new investment cycle that is opening up in the United States at the initiative of the federal government, which wants to relocate part of the semiconductor production to the United States.

Applied has already benefited well from the previous cycle, with 20-30% growth in each of its segments and a spectacular expansion of margins since the sector was consolidated. Along with Intel, it appears best positioned to benefit from the $280 billion CHIPS (United States Chips & Science Act).

This brings us back to the glass half empty. Although only 15% of the world's production capacity is located in China, the Middle Kingdom accounts for 60% of semiconductor demand. Last year, Applied generated one third of its sales in China, compared to barely 10% ten years earlier.

Like its peers, the group owes most of its growth to the appetite of the Chinese market. Is this dynamic sustainable in the current geopolitical context? The G7 issued an unusually blunt condemnation this weekend, leaving Beijing facing a fait accompli.

The powder keg in the Asia-Pacific is crystallizing all the tensions. Chips made in Taiwan represent more than a third of the computing power put on the market each year, while two Korean companies alone control more than half of the memory production.

In short, if the "bull case" of semiconductors is obvious since the sector has been consolidated and rationalized, the "bear case" is just as obvious.

Nevertheless, Applied is entering this cycle in a much better position than it was in the last. The equipment maker eliminated its debt and doubled its profits between 2012 and 2020. Recently, the company has set an ambitious target of achieving $6.5 billion in free cash flow by 2024.

This would bring the valuation of the moment to x16 the profits. Profits that historically the group has reinvested half in its business, usually for an average return on investment of around 10%, before redistributing the other half to its shareholders.

This balanced capital allocation is only made possible by Applied's superior scale, and the oligopolistic situation of its sector. The value creation over the last cycle is very clear, even if the parabolic expansion of the valuation during the pandemic is undoubtedly due to a speculative fever.

The group's half-year results, published at the end of last week, indicate for the moment that sales and profits are holding up well. The most interesting fact is that the share of sales generated in China has fallen from 34% to 21%, with the United States and South Korea benefiting directly from this shift in demand.