AMAT rallies 12% after beat and raise quarter

Applied Materials Inc. (AMAT) reported its financial results for the first quarter of fiscal 2024, beating top and bottom line expectations. The company provided its Q2 outlook which also outpaced expectations. The news provided a boost to shares as the stock rallied 12% in reaction. 

Applied Materials Inc. reported net sales of $6.71 billion, down 0.4% year-over-year, but beating analysts' estimates of $6.48 billion. The company's Semiconductor Systems net sales were $4.91 billion, a 4.9% year-over-year decrease, but still exceeding analysts' estimates of $4.72 billion. Applied Global Services net sales reached $1.48 billion, up 7.8% year-over-year and surpassing analysts' expectations of $1.46 billion. Display and Adjacent Markets net sales increased by 46% year-over-year to $244 million, outperforming analysts' estimates of $239.1 million.

Adjusted earnings per share (EPS) of $2.13, beating expectations of $1.91. The company's adjusted gross margin was 47.9%, compared to 46.8% in the same period last year, beating analysts' estimates of 47%. Applied Materials Inc. reported adjusted operating margin of 29.5%, compared to 29.2% in the same period last year, and adjusted EPS of $2.13, compared to $2.03 in the same period last year, both of which exceeded analysts' expectations.

The company also provided guidance for the second quarter, expecting net revenue of approximately $6.50 billion, plus or minus $400 million, and adjusted EPS in the range of $1.79 to $2.15, compared to analysts' estimates of $6.3 billion and $1.79, respectively.

Applied Materials Inc. generated $2.33 billion in cash from operations and distributed $966 million to shareholders, including $700 million in share repurchases and $266 million in dividends. The company's recent disclosed change in the useful lives of certain property, plant, and equipment increased GAAP and non-GAAP EPS by $0.03.

In conclusion, Applied Materials Inc. reported strong financial results for the first quarter of fiscal 2024, with adjusted EPS and adjusted gross margin beating analysts' expectations. The company issued positive guidance for the second quarter, expecting net revenue and adjusted EPS in line with analysts' estimates. Applied Materials Inc. generated strong cash flows and distributed significant amounts to shareholders. The company's recent change in the useful lives of certain property, plant, and equipment positively impacted its financial results. Overall, Applied Materials Inc. remains a solid investment option for investors seeking exposure to the semiconductor equipment industry.