Latest news with #AppliedMaterials'
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
United News of India
28-05-2025
- Business
- United News of India
Karnataka aims to become semiconductor hub: CM Siddaramaiah
Bengaluru, May 28 (UNI) Karnataka Chief Minister Siddaramaiah on Wednesday reaffirmed the state's commitment to becoming India's semiconductor hub, following a meeting with the leadership of Applied Materials, a leading global semiconductor equipment manufacturer. "With a strong two-decade presence in Bengaluru, they shared an impressive blueprint to kickstart a transformative chapter in Karnataka's semiconductor journey," Siddaramaiah stated. "Our government is committed to full cooperation and providing a seamless platform for investment." Applied Materials has announced plans to establish a Collaborative Engineering Center in Bengaluru, with an investment of $400 million over four years. The center aims to bring together engineers, suppliers, and academic institutions to accelerate the development and commercialization of technologies for semiconductor manufacturing equipment. It is expected to support over $2 billion in planned investments and create at least 500 new advanced engineering jobs, along with potentially another 2,500 jobs in the manufacturing ecosystem. In addition to Applied Materials' investment, the Karnataka government has approved Zoho-backed Silectric's proposal to set up a semiconductor unit in the state at a cost of ₹3,425.6 crore. Furthermore, the state has cleared an allocation of ₹89.80 crore for the creation of a Semiconductor Fabless Accelerator Lab 2.0, aimed at developing the fabless ecosystem and enabling the creation of startups and Indian intellectual property. The state is also focusing on expanding its semiconductor ecosystem beyond Bengaluru. State IT Minister Priyank Kharge has stated that Bengaluru will be the semiconductor design hub, while Mysuru will serve as a complementary cluster for manufacturing and related activities. These developments underscore Karnataka's strategic efforts to position itself at the forefront of India's semiconductor industry, leveraging its robust IT ecosystem, skilled workforce, and proactive policy initiatives. UNI BDN GNK 1208
Business Insider
17-05-2025
- Business
- Business Insider
‘China Could Be a Drag on Growth,' Says Wall Street about Applied Materials (AMAT)
Applied Materials (AMAT) saw strong demand for advanced products like logic and NAND in its second-quarter results, but its growth was somewhat limited by weaker spending in China. Indeed, the company's revenue was impacted by a 21% drop in China, which caused its stock to drop by 5% in today's trading. As a result, analysts had varied views on Applied Materials' performance. Confident Investing Starts Here: Quickly and easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks straight to you inbox with TipRanks' Smart Value Newsletter Indeed, J.P. Morgan analysts, while maintaining an Overweight rating, lowered their price target from $240 to $210, due to the company's exposure to China and weaker spending in the region. They pointed out that there was strong growth in advanced technologies but also noted the drag from older tech, particularly in China. On the positive side, J.P. Morgan expects Applied Materials to benefit from a strong position in advanced foundry and DRAM markets. Bank of America also has some worries about China, but praised the company's ability to maintain a strong gross margin due to leading-edge demand. However, Morgan Stanley took a more cautious stance by reiterating its Underweight rating and lowering its target slightly from $164 to $162. The firm noted that while tariffs and export controls might eventually benefit U.S. companies like Applied Materials by encouraging multinational spending in the U.S., the current trade tensions with China are likely to continue creating challenges in the short term. Needham, on the other hand, maintained its Buy rating thanks to Applied Materials' strong gross margin, especially with the increased contribution from Taiwan, and the success of its process control products. What Is the Target Price for AMAT? Turning to Wall Street, analysts have a Strong Buy consensus rating on AMAT stock based on 13 Buys and two Holds assigned in the past three months, as indicated by the graphic below. Furthermore, the average AMAT stock price target of $199.58 per share implies 21% upside potential.
Yahoo
15-05-2025
- Business
- Yahoo
Applied Materials (NASDAQ:AMAT) Reports Q1 In Line With Expectations But Inventory Levels Increase
Semiconductor machinery manufacturer Applied Materials (NASDAQ:AMAT) met Wall Street's revenue expectations in Q1 CY2025, with sales up 6.8% year on year to $7.1 billion. The company expects next quarter's revenue to be around $7.2 billion, coming in 0.5% above analysts' estimates. Its non-GAAP profit of $2.39 per share was 3.4% above analysts' consensus estimates. Is now the time to buy Applied Materials? Find out in our full research report. Revenue: $7.1 billion vs analyst estimates of $7.13 billion (6.8% year-on-year growth, in line) 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 Free Cash Flow Margin: 14.9%, down from 17.1% in the same quarter last year Inventory Days Outstanding: 142, up from 136 in the previous quarter Market Capitalization: $141.5 billion 'Applied Materials' broad capabilities and connected product portfolio are driving strong results in 2025 amidst a highly dynamic macro environment,' said Gary Dickerson, President and CEO. Founded in 1967 as the first company to develop tools for other businesses in the semiconductor industry, Applied Materials (NASDAQ:AMAT) is the largest provider of semiconductor wafer fabrication equipment. A company's long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Applied Materials's 12.7% annualized revenue growth over the last five years was impressive. Its growth beat the average semiconductor company and shows its offerings resonate with customers, a helpful starting point for our analysis. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions. We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. Applied Materials's recent performance shows its demand has slowed significantly as its annualized revenue growth of 2.7% over the last two years was well below its five-year trend. This quarter, Applied Materials grew its revenue by 6.8% year on year, and its $7.1 billion of revenue was in line with Wall Street's estimates. Beyond meeting estimates, this marks 5 straight quarters of growth, implying that Applied Materials is in the middle of its cycle - a typical upcycle generally lasts 8-10 quarters. Company management is currently guiding for a 6.2% year-on-year increase in sales next quarter. Looking further ahead, sell-side analysts expect revenue to grow 4% over the next 12 months, similar to its two-year rate. Although this projection implies its newer products and services will fuel better top-line performance, it is still below average for the sector. At least the company is tracking well in other measures of financial health. Unless you've been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) stock benefiting from the rise of AI. Click here to access our free report one of our favorites growth stories. Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business' capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production. This quarter, Applied Materials's DIO came in at 142, which is 3 more days than its five-year average, suggesting that the company's inventory levels have grown slightly above the long-term average. It was encouraging to see Applied Materials beat analysts' EPS and adjusted operating income estimates this quarter. On the other hand, its revenue was in line and its inventory levels slightly increased. Zooming out, we think this was a mixed quarter. The market seemed to be hoping for more, and the stock traded down 3.3% to $168.85 immediately after reporting. So do we think Applied Materials is an attractive buy at the current price? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free. 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Yahoo
15-05-2025
- Business
- Yahoo
AMAT Earnings: Demand Holding Up So Far
Applied Materials beat analyst expectations for earnings but missed on revenue. The company said that customer demand hasn't changed due to an uncertain economic environment. Applied Materials' outlook for the third quarter included wide ranges for revenue and adjusted earnings per share. 10 stocks we like better than Applied Materials › Here's our initial take on Applied Materials' (NASDAQ: AMAT) second-quarter financial report. Metric Q2 2024 Q2 2025 Change vs. Expectations Revenue $6.65 billion $7.10 billion +7% Missed Earnings per share (adjusted) $2.09 $2.39 +14% Beat Operating margin (adjusted) 29% 30.7% +1.7 pp n/a Semiconductor systems revenue $4.90 billion $5.26 billion +7% n/a Semiconductor equipment manufacturer Applied Materials reported second-quarter results that were mixed relative to analyst expectations. Revenue rose by 7% year over year, a bit short of the consensus estimate, while adjusted earnings per share beat expectations and rose by 14%. The company managed to increase its operating margin to 30.7%. While the global economy is loaded with uncertainty right now, Applied Materials has seen no change to customer behavior so far. Speaking about the current economic and trade environment, Applied Materials CFO Brice Hill said that "... we have not seen significant changes to customer demand and are well-equipped to navigate evolving conditions with our robust global supply chain and diversified manufacturing footprint." Foundry and logic semiconductor equipment accounted for 65% of semiconductor systems revenue during the second quarter, unchanged from the prior-year period. DRAM-related revenue brought in 27% of systems revenue, down from 32%, while flash memory-related revenue surged to 8% of systems revenue from just 3% in the second quarter of 2024. Looking ahead to the third quarter of fiscal 2025, Applied Materials expects to generate revenue between $6.7 billion and $7.7 billion, along with adjusted EPS between $2.15 and $2.35. The wide guidance ranges likely reflect the heightened level of uncertainty facing the company. Applied Materials stock was down about 4% in early after-hours trading soon after the second-quarter report was released. With revenue missing analyst estimates and an outlook that baked in plenty of uncertainty, investors weren't particularly impressed with the company's results. While Applied Materials isn't seeing an impact on customer demand from U.S. tariff policies, that may not remain the case as the company goes deeper into fiscal 2025. A potential economic slowdown could hurt demand for end-user devices, eventually translating into lower capital spending from Applied Materials' customers. Another risk is any slowdown in AI infrastructure investments. The company will likely share more details on its outlook during the earnings call on Thursday evening. Full earnings report Investor relations page Before you buy stock in Applied Materials, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Applied Materials wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $620,719!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $829,511!* Now, it's worth noting Stock Advisor's total average return is 959% — a market-crushing outperformance compared to 170% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 12, 2025 Timothy Green has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Applied Materials. The Motley Fool has a disclosure policy. AMAT Earnings: Demand Holding Up So Far was originally published by The Motley Fool
