Cantor Fitzgerald has revised its price target for Applied Materials (AMAT, Financial), lowering it from $220 to $200, while maintaining an Overweight rating on the stock. Despite the temporary relief provided by the 90-day tariff pause excluding China announced by President Trump, market volatility is expected to continue. This is due to potential semiconductor restrictions under section 232 and changes to AI diffusion regulations, coupled with the persistent tensions between the U.S. and China.
The analyst anticipates that Applied Materials will slightly exceed expectations and raise their outlook, benefiting from positive trends identified in recent reports by peers in the semiconductor equipment industry.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 32 analysts, the average target price for Applied Materials Inc (AMAT, Financial) is $202.74 with a high estimate of $250.00 and a low estimate of $152.00. The average target implies an upside of 30.28% from the current price of $155.61. More detailed estimate data can be found on the Applied Materials Inc (AMAT) Forecast page.
Based on the consensus recommendation from 35 brokerage firms, Applied Materials Inc's (AMAT, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Applied Materials Inc (AMAT, Financial) in one year is $168.87, suggesting a upside of 8.52% from the current price of $155.61. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Applied Materials Inc (AMAT) Summary page.
AMAT Key Business Developments
Release Date: February 13, 2025
- Total Net Sales: Approximately $7.2 billion, up 7% year-over-year.
- Non-GAAP Gross Margin: 48.9%, up 100 basis points year-over-year.
- Non-GAAP Operating Expenses: $1.31 billion.
- Non-GAAP EPS: $2.38, up 12% year-over-year.
- Semiconductor Systems Sales: $5.36 billion, up 9% year-over-year.
- Applied Global Services Revenue: $1.59 billion, up 8% year-over-year.
- Display Business Revenue: $183 million.
- Cash and Cash Equivalents: $6.3 billion.
- Debt: $6.3 billion.
- Cash from Operations: $925 million.
- Free Cash Flow: $544 million.
- Shareholder Distribution: $1.6 billion, including $1.3 billion in share repurchases and $326 million in dividends.
- Share Repurchase Authorization Remaining: Approximately $7.6 billion.
- Q2 Revenue Outlook: $7.1 billion, plus or minus $400 million.
- Q2 Non-GAAP EPS Outlook: $2.30, plus or minus $0.18.
- Q2 Non-GAAP Gross Margin Outlook: Approximately 48.4%.
- Q2 Non-GAAP Operating Expenses Outlook: Approximately $1.3 billion.
- Q2 Tax Rate Outlook: Approximately 13%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Applied Materials Inc (AMAT, Financial) delivered record revenues in the first fiscal quarter of 2025, surpassing the previous high set last quarter.
- The company is well-positioned at major device architecture inflections, including next-generation gate-all-around transistors and advanced packaging, which are critical for energy-efficient AI.
- Applied Materials Inc (AMAT) achieved a 12% year-over-year increase in non-GAAP earnings per share, driven by healthy revenue growth and margin expansion.
- The company has strong leadership in key areas such as leading-edge logic, high-performance DRAM, and advanced packaging, which are expected to drive future growth.
- Applied Materials Inc (AMAT) is focused on high-velocity co-innovation with customers and partners, accelerating the development of next-generation technologies and optimizing R&D efficiencies.
Negative Points
- The company's ability to serve the China market is constrained by updated trade rules, resulting in an estimated $400 million revenue impact in fiscal 2025.
- Applied Materials Inc (AMAT) expects a decline in DRAM sales due to the non-repetition of prior year sales to customers in China.
- The company anticipates a headwind to revenue in the second quarter of fiscal 2025 due to expanded export controls, with nearly half of the impact in Q2.
- Applied Materials Inc (AMAT) faces challenges in the ICAPS market, with a more measured level of investment following strong spending in previous years.
- The near-term service growth is negatively impacted by trade restrictions, although the company remains confident in achieving low double-digit annualized growth over the longer term.
