Meanwhile, AEM remains a key supplier to its main customer Intel Corp, with further upside if Intel's move to provide foundry services gains traction.
"Despite ongoing market volatility, Singapore tech stocks have also continue to perform strongly in 2026, supported by resilient FY2025 results and sustained global AI demand," says Tan.
She observes that with the semiconductor and AI upcycle still gaining traction, and valuations remaining at a discount to US peers. As such, the Singapore tech sector, with support from fund flows originating the government's market boosting measures, means this outperformance can continue.
"Barring a significant deterioration in macro conditions, we believe the risk-reward for AEM remains skewed to the upside, underpinned by its strong growth profile, improving customer diversification and favourable sector tailwinds," says Tan.
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While she has kept her earnings forecast, Tan has applied a higher valuation multiple of 32x FY2027 earnings, up from 30x FY2026 earnings, to "better reflect a more representative earnings base as customer diversification progresses."
Even then, Tan says that this target valuation multiple remains at a "slight discount" to AEM's global peers, given how it has a smaller cap and also given how there are ongoing legal issues.
AEM shares closed at $3.78 on March 19.
