Applied Materials forecasts revenue above estimates, shares dip on high expectations

Applied Materials anticipates fourth-quarter revenue to exceed Wall Street's predictions, fueled by sustained demand for advanced AI chips and the resulting robust spending on semiconductor manufacturing equipment. The company projects revenue to be around $10.25 billion, plus or minus $500 million, surpassing the analysts' average estimate of $9.54 billion. This optimism stems from increased investments by chipmakers to build out AI infrastructure, a sector where Applied Materials provides essential tools for wafer fabrication processes. Chief Financial Officer Brice Hill stated, "We expect continued strong revenue growth in the second half of the calendar year, particularly in DRAM as well as leading-edge foundry-logic and advanced packaging." The company's third-quarter revenue of $9.12 billion also beat expectations. However, investor sentiment led to a 5% drop in Applied Materials' shares during extended trading, as expectations were already elevated following strong performances from industry peers like Lam Research and KLA Corp.

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We expect continued strong revenue growth in the second half of the calendar year, particularly in DRAM as well as leading-edge foundry-logic and advanced packaging.