Applied Materials Inc, the largest US maker of chipmaking machinery, gave a bullish forecast for the current quarter, indicating that an industry slump might be fading.
Fiscal fourth-quarter sales would be about US$6.51 billion, the company said in a statement on Thursday. That compares with an average analyst estimate of US$5.88 billion.
Excluding some items, profit would be US$1.82 to US$2.18 per share in the period, which ends in October, versus a projection of US$1.61 per share.
The shift toward artificial intelligence computing and the rise of Internet-connected devices are helping bolster results, Applied Materials chief executive officer Gary Dickerson said in the statement, “enabling us to consistently deliver strong results in 2023 and positioning Applied Materials for sustainable outperformance.”
Applied Materials shares gained about 2 percent in late trading after the results were released. They earlier closed at US$137.59 in New York, leaving them up 41 percent this year.
Third-quarter profit was US$1.90 a share, excluding some items. Sales fell 1.5 percent to US$6.43 billion in the period.
Analysts estimated earnings per share of US$1.73 and revenue of US$6.16 billion.
After three years of strong ordering, Applied Material’s chipmaker customers have been slowing down their expansion plans as they cope with a glut in the market for electronic components, but the company expects the industry to shrug off short-term problems and accelerate to US$1 trillion in total revenue by the end of the decade.
The use of semiconductors has spread far beyond the computer industry, with an increasing number of chips going into automobiles, industrial equipment and so-called Internet of Things products, such as smart home appliances and security systems.
“Consumer devices, vehicles, buildings, factories and infrastructure are all getting smarter and more capable,” Dickerson said on a conference call with analysts.
As the industry’s recovery nears, analysts see Applied Materials returning to sales growth in the second half of next year.
Semiconductor-related stocks have been a favorite pick for investors, who expect them to benefit from the explosion in artificial intelligence (AI) systems. Demand for chips from Nvidia Corp has been particularly strong, helping send that company’s valuation past the US$1 trillion mark.
However, other areas are struggling. For Applied Materials, demand from memorychip makers has been a weak spot
On the conference call with analysts, chief financial officer Brice Hill said that about 5 percent of Applied Materials’ wafer-fab equipment is dedicated to the AI market. That compares with 20 percent for data center chips and 10 percent to 15 percent for Internet of Things equipment.
“So if you view 5 percent as a relatively small amount, we do think that it’s growing rapidly and will be an important workload going forward,” he said.
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