Applied Materials Poised For Q2 Earnings Report Amid Industry Dynamics
$AMAT
Applied Materials, Inc. (NASDAQ:AMAT), a leading provider of equipment, services and software for the global semiconductor industry, has recently reported a significant increase in quarterly earnings, driven by robust demand for advanced chip-making technologies. The company’s innovative solutions are essential for the production of cutting-edge semiconductors, which are crucial for various high-growth markets, including artificial intelligence, 5G, and automotive electronics. This financial performance underscores Applied Materials’ pivotal role in the semiconductor supply chain and its strong market position.
Applied Materials, Inc. is set to release its second-quarter earnings report after the closing bell on Thursday. The Santa Clara, California-based company is anticipated to report earnings of $1.99 per share, an increase from $1.78 per share in the same period last year. The company is projected to post quarterly revenue of $6.54 billion, according to data from Benzinga Pro. This follows a recent downgrade by Jefferies analyst Blayne Curtis, who adjusted the price target from $215 to $210. The company, known for its extensive portfolio in semiconductor equipment, flat panel liquid crystal displays (LCDs) and solar photovoltaic (PV) cells and modules, operates through three primary segments: Semiconductor Systems, Applied Global Services and Display and Adjacent Markets.
In the previous fiscal year, the Semiconductor Systems segment contributed 74% of total revenue, while Applied Global Services and Display and Adjacent Markets accounted for 22% and 4%, respectively. The firm’s Silicon segment focuses on front-end operations in semiconductor manufacturing, involving the deposition or implantation of multiple thin layers of materials onto silicon wafers. Applied Materials has installed over 33,000 systems globally, ensuring customer satisfaction through its Applied Global Services segment. The company has also expanded its portfolio to include equipment for thin film transistor (TFT) LCDs and OLED, used in smartphones, TVs and other consumer electronics. The Energy and Environmental Solutions segment offers equipment for manufacturing both wafer-based crystalline silicon (c-Si) and glass-based thin film used in solar PV cell fabrication.
In recent times, Applied Materials has demonstrated resilience and adaptability in a challenging market environment. The company beat analysts’ revenue expectations by 3.4% last quarter, reporting revenues of $6.71 billion, flat year on year. Analysts are now expecting a slight decline in revenue for the current quarter, projecting a 1.4% year-on-year decrease to $6.54 billion. The company has only missed Wall Street’s revenue estimates once in the past two years, exceeding top-line expectations by an average of 3%. The firm’s strength in the Applied Global Services segment, driven by the growing adoption of the 200-mm system and solid momentum in the subscription business, is likely to have contributed to its top-line growth.
For the second quarter, Applied Materials projects AGS sales at $1.50 billion, with the Zacks Consensus Estimate for the same pinned at $1.502 billion, indicating a year-over-year growth of 5.2%. Additionally, the company’s Semiconductor Systems segment is expected to benefit from growth opportunities across specialty nodes and new nodes ramping across foundry, logic, NAND and DRAM. However, geopolitical tensions, particularly between the United States and China, pose significant challenges. The restrictions imposed on China tech exports are anticipated to impact the company’s fiscal second-quarter results. Applied Materials projects Semiconductor Systems sales at $4.80 billion, with the Zacks Consensus Estimate indicating a decline of 3.5% from the year-ago quarter.
The Display and Adjacent Markets segment is also expected to see a decline, with projected sales pegged at $150 million, indicating a fall of 10.7% from the previous year. The upcoming earnings report will be closely watched, as analysts have collectively reevaluated their estimates over the past 30 days, reflecting a consensus EPS estimate of $1.96 per share, a 2% decline from the year-ago period. The consensus revenue estimate stands at $6.51 billion, representing a 1.8% year-over-year decrease. Analysts also forecast Net Sales for the Semiconductor Systems segment to reach $4.80 billion, a 3.5% decline, while the Applied Global Services segment is expected to see a 5.2% increase to $1.50 billion. Applied Materials is navigating a complex landscape marked by geopolitical tensions and evolving market demands.
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