Applied Materials Inc shares on Thursday surged 10 percent in late trading after delivering a surprisingly upbeat sales forecast, signaling that demand for artificial intelligence (AI) and memory chips is fueling equipment purchases.
The company, which is the largest US supplier of chipmaking gear, expects revenue of about US$7.65 billion in the fiscal second quarter. Analysts had estimated US$7.03 billion on average for the period, which runs through April.
“The acceleration of industry investments in AI computing” is powering the company’s results, Applied Materials chief executive officer Gary Dickerson said in a statement.
Photo: Reuters
Applied Materials is bouncing back from a slowdown spurred by export restrictions on China, the biggest market for chips. Demand for memorychip machinery should be a particular bright spot — customers such as Samsung Electronics Co and Micron Technology Inc are scaling up manufacturing to cope with shortages in that market.
The shares rose as high as US$365.79 after the results were released. They had been up 28 percent this year, closing at US$328.39.
Dickerson cited the need for high-bandwidth memory — a variety used by AI computing systems — as a key driver.
“We expect to grow our semiconductor equipment business over 20 percent this calendar year,” he said.
The etching and deposition tools used to make dynamic random access memory “are set to expand due to strong demand from AI-chip customers,” Bloomberg Intelligence reported.
The company also just resolved a high-profile regulatory issue. Earlier this week, Applied Materials announced plans to pay US$252.5 million to settle a US Department of Commerce investigation into improper exports to China, ending a years-long saga.
Second-quarter earnings per share would be about US$2.64, excluding some items, Applied Materials said.
That compares with a projection of US$2.29.
Though revenue fell 2 percent to US$7.01 billion in the first quarter, that was a far less steep a drop than anticipated. Analysts had estimated US$6.86 billion, data compiled by Bloomberg showed.
Profit per shares was US$2.38 in the period, which ended on Jan. 25, versus a US$2.21 projection.
The commerce department settlement resolved allegations that certain shipments to China between November 2020 and July 2022 did not comply with export regulations. The US Department of Justice and the US Securities and Exchange Commission also closed related probes into the matter without taking action, Applied Materials said.
Separately, stricter export regulations have taken a toll on the company.
Applied Materials in October last year said that an expansion of US curbs on China would cost it US$600 million in lost revenue this fiscal year. The Santa Clara, California-based company also announced plans to cut 4 percent of its global workforce.
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