Latest news with #AMAT
Yahoo
2 days ago
- Business
- Yahoo
AMAT Q1 Earnings Call: Revenue Misses, Margins and AI-Driven Demand Shape Outlook
Semiconductor machinery manufacturer Applied Materials (NASDAQ:AMAT) fell short of the market's revenue expectations in Q1 CY2025, but sales rose 6.8% year on year to $7.1 billion. Its non-GAAP EPS of $2.39 per share was 3.4% above analysts' consensus estimates. Is now the time to buy AMAT? Find out in our full research report (it's free). Revenue: $7.1 billion (6.8% year-on-year growth) Adjusted EPS: $2.39 vs analyst estimates of $2.31 (3.4% beat) Adjusted Operating Income: $2.18 billion vs analyst estimates of $2.12 billion (30.7% margin, 2.6% beat) Revenue Guidance for Q2 CY2025 is $7.2 billion at the midpoint, roughly in line with what analysts were expecting Adjusted EPS guidance for Q2 CY2025 is $2.35 at the midpoint, above analyst estimates of $2.31 Operating Margin: 30.5%, up from 28.8% in the same quarter last year Inventory Days Outstanding: 142, up from 136 in the previous quarter Market Capitalization: $129.8 billion Applied Materials' first quarter performance was shaped by increased investments in leading-edge foundry and logic, as well as continued demand for semiconductors used in artificial intelligence (AI) applications. CEO Gary Dickerson highlighted the company's focus on enabling next-generation technologies such as gate-all-around transistors and advanced DRAM, stating, 'We are very well-positioned at major technology inflections in fast-growing areas of the market.' Despite challenges from trade restrictions, especially in China, Applied Materials saw broad-based growth across business segments, with the Semiconductor Systems segment benefiting from customers' accelerated adoption of new chip architectures. The company also cited gains in its advanced etch and process diagnostics products as contributors to margin expansion. Looking ahead, Applied Materials' guidance is underpinned by anticipated acceleration in leading-edge foundry-logic and continued strength in DRAM and NAND upgrades, particularly those tied to AI data center investments. CFO Brice Hill explained, 'We expect the core [services] to grow at low double digits during the year, even with the impacts from lower China business due to trade restrictions.' Management emphasized the durability of demand for AI-enabling semiconductor technologies and highlighted ongoing investments in new product innovation and high-velocity co-innovation with customers. The company cautioned that macroeconomic volatility, tariffs, and evolving trade policies remain risks to its outlook, but maintained that its diversified manufacturing and supply chain footprint provide flexibility to navigate these challenges. Management pointed to robust demand for AI-related semiconductor technologies and highlighted recent product advances, while acknowledging near-term headwinds from China trade restrictions and segment-specific softness. AI and advanced logic demand: Growth was driven by strong customer investments in advanced logic and DRAM technologies, with particular emphasis on AI data center applications and high-bandwidth memory, which management expects to be major market drivers for the next several years. China trade restrictions' impact: The company experienced continued headwinds in China, especially in its services and 200-millimeter equipment business, due to expanded U.S. export controls. Management noted these restrictions led to weaker near-term performance for Applied Global Services (AGS) but expects core service revenue (excluding 200mm) to grow at low double digits through the year. Product innovation and adoption: New products, including the Sym3 Magnum etch system and Cold Field Emission eBeam technology, have seen rapid market adoption, supporting revenue growth and margin improvement. The Sym3 Magnum generated over $1.2 billion in revenue since its launch in February 2024. Margin improvement initiatives: Profitability benefited from favorable product mix, ongoing cost management, and value-based pricing strategies. Management believes recent cost improvements and better value capture will support sustainable margin expansion in future periods. Diversified manufacturing and supply chain: Applied Materials leveraged its global supply chain flexibility to mitigate the effects of tariffs and supply chain disruptions. The company's ability to shift production and duplicate sources globally has limited the near-term financial impact from changing trade policy and geopolitical risks. Applied Materials' forward outlook is shaped by accelerating AI-related demand, ongoing product innovation, and the company's ability to manage external risks such as tariffs and trade dynamics. AI-driven semiconductor investments: Management expects continued robust demand for advanced logic, DRAM, and packaging solutions supporting AI infrastructure, with leading-edge foundry-logic acceleration set to offset weakness in mature ICAPS segments. Investments by cloud service providers and leading chipmakers are projected to drive sustained growth in wafer fab equipment. Service segment growth and recurring revenue: The company anticipates core service revenues, excluding 200-millimeter equipment, will grow at a low double-digit rate, supported by an increasing share of subscription-based agreements and recurring business. However, trade restrictions in China are expected to limit growth in certain service and equipment categories in the near term. Margin resilience amid external pressures: Management highlighted ongoing margin expansion efforts through cost control, pricing discipline, and flexible manufacturing. While tariffs and macroeconomic volatility present ongoing risks, the company expects operating margins to remain in the low-48% range, with further improvements possible through operational initiatives. In the coming quarters, the StockStory team will focus on (1) the pace of adoption for new AI-related semiconductor technologies and the resulting impact on leading-edge foundry and logic revenue, (2) whether service segment growth can maintain momentum despite ongoing China trade restrictions and 200mm equipment headwinds, and (3) progress toward sustainable margin expansion through cost management and product mix. The continued ramp of advanced packaging and further penetration of subscription-based services will also be key indicators of execution. Applied Materials currently trades at a forward P/E ratio of 17.2×. Should you double down or take your chips? Find out in our full research report (it's free). The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today. Sign in to access your portfolio
Yahoo
7 days ago
- Business
- Yahoo
Applied Materials (AMAT) Sees 40% DRAM Revenue Growth in 2025, Mizuho Maintains Outperform
Mizuho analyst Vijay Rakesh recently lowered the price target on Applied Materials, Inc. (NASDAQ:AMAT) to $195 from $205 and kept an Outperform rating on the shares. AMAT provides equipment, services, and software for the semiconductor industry. The company reported an in-line quarter but faces headwinds in China, the analyst told investors in a research note. A technician in a clean room assembling a semiconductor chip using a microscope. The firm recently posted earnings for the second fiscal quarter, with Gary Dickerson, President and CEO, reporting that his firm delivered strong results across the board, including record earnings per share. Dickerson stated that Applied is well-positioned in areas such as AI, foundry-logic, advanced DRAM, packaging, and power devices. He highlighted that in 2025, AMAT expects revenues from advanced DRAM customers to grow more than 40% as it ramps investments in DDR-5 and high-bandwidth memory. Dickerson revealed strong market adoption of new products, noting that the Sym3 Magnum etch system for advanced patterning has generated more than $1.2 billion of revenue since launched in February 2024. While we acknowledge the potential of AMAT, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than AMAT and that has 100x upside potential, check out our report about this cheapest AI stock. READ NEXT: 33 Most Important AI Companies You Should Pay Attention To and 30 Best AI Stocks to Buy According to Billionaires Disclosure: None. Sign in to access your portfolio
Yahoo
29-05-2025
- Business
- Yahoo
Applied Materials (AMAT) Sees 40% DRAM Revenue Growth in 2025, Mizuho Maintains Outperform
Mizuho analyst Vijay Rakesh recently lowered the price target on Applied Materials, Inc. (NASDAQ:AMAT) to $195 from $205 and kept an Outperform rating on the shares. AMAT provides equipment, services, and software for the semiconductor industry. The company reported an in-line quarter but faces headwinds in China, the analyst told investors in a research note. A technician in a clean room assembling a semiconductor chip using a microscope. The firm recently posted earnings for the second fiscal quarter, with Gary Dickerson, President and CEO, reporting that his firm delivered strong results across the board, including record earnings per share. Dickerson stated that Applied is well-positioned in areas such as AI, foundry-logic, advanced DRAM, packaging, and power devices. He highlighted that in 2025, AMAT expects revenues from advanced DRAM customers to grow more than 40% as it ramps investments in DDR-5 and high-bandwidth memory. Dickerson revealed strong market adoption of new products, noting that the Sym3 Magnum etch system for advanced patterning has generated more than $1.2 billion of revenue since launched in February 2024. While we acknowledge the potential of AMAT, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than AMAT and that has 100x upside potential, check out our report about this cheapest AI stock. READ NEXT: 33 Most Important AI Companies You Should Pay Attention To and 30 Best AI Stocks to Buy According to Billionaires Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Globe and Mail
21-05-2025
- Business
- Globe and Mail
Should You Buy, Sell or Hold Applied Materials Stock Post Q2 Earnings?
Applied Materials AMAT shares have lost 5.3% since it reported financial results for the second quarter of fiscal 2025 on May 15. Though the company's second-quarter top and bottom lines surpassed the Zacks Consensus Estimate, declining revenues in the Chinese market weighed on the investors' sentiments. The year 2025 has remained highly volatile for AMAT stock, with its share price rising mere 1.9% year to date. The stock has also underperformed other semiconductor players, including Lam Research LRCX, KLA Corporation KLAC and ASML Holding ASML. The underperformance of AMAT's share price, along with concerns related to China sales prospects, raises the question: Should investors buy, hold or sell AMAT stock? Declining China Sales: A Key Concern for AMAT's Prospects A major headwind for Applied Materials is increasing U.S.-China tensions and export restrictions on semiconductor manufacturing equipment. China remains a crucial market for Applied Materials, accounting for a significant portion of total revenues. However, U.S. government restrictions on selling advanced semiconductor equipment to Chinese manufacturers are hurting Applied Materials' sales and growth outlook. In the second quarter of fiscal 2025, Applied Materials' China sales plunged 37.3% year over year to $1.77 billion. China market's contribution to total revenues also shrank to 25% from the year-ago quarter's 43%. This marked the third consecutive quarter of a year-over-year fall in China revenues. Earlier, management had acknowledged that the company faces elevated uncertainty in China due to ongoing geopolitical tensions and regulatory scrutiny. If stricter export controls are imposed, Applied Materials' long-term revenue potential could take a hit, as Chinese chipmakers are forced to turn to domestic alternatives or non-U.S. suppliers. However, despite the headwinds, AMAT has several upsides that enable the company to perform well. AMAT Leads the Market With Superior Technology Applied Materials is well-positioned to capitalize on the demand for AI-driven semiconductors that has become the driving force for this industry. AMAT has made significant strides in cutting-edge chip manufacturing, particularly in gate-all-around (GAA) transistors, high-bandwidth memory and advanced packaging. These innovations are critical to enabling faster, more energy-efficient AI processing. Applied Materials' revenues from advanced semiconductor nodes surpassed $2.5 billion in fiscal 2024, and management expects this figure to double in fiscal 2025. The transition from FinFET to GAA transistors is expanding AMAT's total addressable market by 15%, while Applied Materials' revenues in this segment are projected to grow 30% per wafer fab capacity expansion. The company is also on track to secure more than 50% of the market share in GAA and backside power delivery, solidifying its leadership in the AI computing era. The advanced packaging segment has become an increasingly critical part of Applied Materials' business, with revenues tripling over the past four years to $1.7 billion in fiscal 2024. AMAT has secured volume orders from leading-edge customers for its Integrated Hybrid Bonding technology, strengthening its position in next-generation chip manufacturing. The upcoming EPIC Center in Silicon Valley, expected to go live in 2026, will further drive innovation in semiconductor packaging and process technology. In its most recent earnings report, AMAT highlighted that the company is well-positioned to gain from demand growth in gate-all-around transistors, backside power delivery, and high-bandwidth memory. Applied Materials' gross margins hit 49.2% in the second quarter of fiscal 2025, which was the highest since 2000. Moreover, the company expects its advanced DRAM revenues to grow more than 40% in 2025, driven by DDR5 and HBM. Due to all these positive factors, analysts are optimistic about the stock's future growth. The Zacks Consensus Estimate for fiscal 2025 and 2026 revenues is projected to grow 5.96% and 5.7%, respectively. The Zacks Consensus Estimate for 2025 and 2026 earnings is projected to grow 9.2% and 5%, respectively. Applied Materials is on track to sustain its momentum. Additionally, the company has consistently outperformed earnings expectations, delivering an average surprise of 4.94% over the last four quarters, reflecting its strong execution capabilities. AMAT's Valuation Offers Upside Potential Applied Materials is trading at a 12-month forward P/E ratio of 17.09, significantly below the industry average of 25.5. Given its dominance in semiconductor equipment and AI-driven chip manufacturing, this valuation discount suggests strong upside potential over the long term. Applied Materials is also trading at a lower P/E multiple than other semiconductor companies, including Lam Research, KLA Corporation and ASML Holding. Currently, Lam Research, KLA Corporation and ASML Holding have a P/E multiple of 21.25X, 24.1X and 26.2X, respectively. Applied Materials Forward 12 Months (P/E) Valuation Chart Conclusion: Hold AMAT for Now Applied Materials remains a key player in semiconductor manufacturing, with a strong position in AI-driven chip development, advanced packaging and next-generation process technology. For investors, retaining AMAT is the best approach. Currently, Applied Materials carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Zacks Names #1 Semiconductor Stock It's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom. With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028. See This Stock Now for Free >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report KLA Corporation (KLAC): Free Stock Analysis Report ASML Holding N.V. (ASML): Free Stock Analysis Report Lam Research Corporation (LRCX): Free Stock Analysis Report Applied Materials, Inc. (AMAT): Free Stock Analysis Report
Yahoo
19-05-2025
- Business
- Yahoo
Applied Materials (AMAT) Falls on Revenue Miss, China Sales Slump
Applied Materials (AMAT, Financials) shares fell in extended trading Thursday after the chip equipment maker posted weaker-than-expected Q2 revenue amid lower sales in China. Revenue totaled $7.10 billion, slightly below the $7.13 billion analyst forecast from LSEG. Semiconductor revenue came in at $5.26 billion, missing the $5.31 billion consensus. Warning! GuruFocus has detected 6 Warning Signs with COIN. Chinese revenue accounted for about 25% of total sales during the quarter, and the decline weighed on overall results. Still, the company said it had not seen a significant shift in customer demand. Investors remain focused on potential U.S. tariffs targeting chips and electronics, which have been exempt since early April. The stock had fallen nearly 40% between January and April amid concerns over export licensing rules tied to AI chips. It has since recovered 40% on easing trade tensions. Technically, shares had tested the upper trendline of a descending channel but failed to hold above the 200-day moving average before earnings. The RSI reached overbought levels, increasing the risk of profit-taking. After-hours trading saw the stock fall to $165. Analysts are watching support at $158, near March and November peaks. A break below this level could push shares toward $145, where prior consolidation occurred. On the upside, resistance may appear at $190 and again at $213, where trendlines and historical peaks cluster. This article first appeared on GuruFocus. Sign in to access your portfolio
