Applied Materials (AMAT, Financial), a leading U.S. chip equipment manufacturer, reported a 5% revenue increase to $7.05 billion for its fourth fiscal quarter, surpassing the expected $6.95 billion. Adjusted earnings per share stood at $2.32, exceeding forecasts of $2.19. However, the company provided a cautious revenue outlook, indicating potential order delays from semiconductor clients.
The revenue guidance for the first fiscal quarter is projected at $7.15 billion, slightly below analysts' estimates of $7.22 billion. Adjusted earnings per share are expected to be around $2.29, marginally above the anticipated $2.27. Despite strong demand for advanced equipment driven by AI chip needs, some market slowdowns are affecting spending on Applied Materials' products.
Additionally, tighter U.S. export restrictions on high-end chips to China contribute to ongoing uncertainties for tool suppliers and chipmakers. The company's revenue from China has decreased, with the country accounting for 30% of total sales last quarter, down from 44% a year earlier.
Applied Materials faces competition from other equipment suppliers such as KLA Corp (KLAC), Lam Research (LRCX), and ASML (ASML). Despite challenges, CEO Gary Dickerson remains optimistic about AI and new chip technologies driving industry growth. The company's main clients include major chip manufacturers like TSMC (TSM), Samsung Electronics (SSNLF), and Intel (INTC), who provide early order indications reflecting future demand trends.
Analysts note that while AI continues to drive growth in FoundryLogic, other business lines remain sluggish. The company's ICAPS segment, catering to appliances, communications, automotive, and sensors, experiences tepid demand. Despite these challenges, Dickerson underscores that Applied Materials is well-positioned across high-end sectors.
After the earnings announcement, Applied Materials' stock fell about 5% in after-hours trading. The stock closed at $186 on Thursday and is up 15% for 2024.
