“Demand for advanced semiconductors remains much higher than supply,” CEO Gary Dickerson said.
- Applied Materials Q4 sales rose 53%; sales, profit and the Q1 forecasts were all higher than expectations.
- AMAT shares had climbed about 24% in four sessions through Wednesday.
- Retail sentiment for AMAT inched higher in the ‘extremely bullish’ zone.
Applied Materials (AMAT) on Thursday reported better-than-expected quarterly results and said its customers were building new manufacturing plants at a breakneck pace amid record demand for semiconductors.
However, shares rose only a most 1% in overnight trading, likely weighed down by market volatility after the resignation of Nvidia CEO Jensen Huang and a rally in AMAT shares in the run-up to the earnings report.
Applied Materials Says Fab Capacity Far Below Chip Demand
Demand for advanced semiconductors is still outstripping supply, Applied Materials CEO Gary Dickerson said on the analyst call, arguing that the industry will need years of investment in new fabrication capacity to close the gap.
“Demand for advanced semiconductors remains much higher than supply, and multiyear investments in new fab capacity are needed for the industry to close this supply-demand gap,” he said, adding that customers are pressing the company to deliver equipment sooner.
“Nobody is saying that they’re not wanting the tools as fast as we can get them,” Dickerson said, adding that recent trips had brought “constant requests from customers to accelerate our ramp and deliver earlier.”
Applied Materials expects 2027 to set another record for both the company and the broader market, with wafer fab equipment demand projected to rise more than 30% year over year. The pace of growth will hinge on whether the semiconductor supply chain can expand quickly enough, Dickerson said.
AMAT stock rose about 24% in the four sessions through Wednesday. They dipped 3.6% on Thursday, just as the markets were digesting the departure of Nvidia’s Huang.
Applied Materials’ Q4 Update
Record in the fourth quarter rose 53% to $10.41 billion, beating analysts’ expectations of $10.30 billion from FactSet. Adjusted profit came in at $4.16 per share, also higher than expectations of $4.06.
The quarterly forecast also came in higher than Wall Street’s targets. Applied Materials expects fiscal first quarter adjusted EPS of $4.35, plus or minus $0.20, on revenue of $11.10 billion, plus or minus $500 million. Analysts expected $4.24 and $10.85 billion, respectively.
Applied Materials makes the equipment and software chipmakers use to manufacture semiconductors, and competes with companies such as Lam Research and ASML.
Retail View On AMAT
On Stocktwits, the retail sentiment for AMAT climbed higher in the ‘extremely bullish’ zone, with traders posting bullish commentary but also showing concern around the weak stock move.
A trader blamed the Nvidia fallout for the weak after-hours move, saying “$AMAT nice job Huang screwing up everyone’s earnings calls for the rest of the year.” Another wrote: “$AMAT the fact that this didn’t jump from earnings says it all, pullback coming.”
Year to date, AMAT shares are up 49%.
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