Applied Materials 2025 Q2 Earnings Beats Expectations as Net Income Grows 24.1%

Applied Materials, ranking 90th by market capitalization, reported its fiscal 2025 Q2 earnings on May 15th, 2025. The semiconductor equipment manufacturer exceeded earnings expectations, reporting a second-quarter EPS of $2.39 per share, surpassing analyst estimates of $2.31. However, the company slightly missed revenue expectations, posting $7.10 billion against the anticipated $7.13 billion. Despite trade restrictions impacting sales in China, Applied Materials maintained a stable outlook for the coming quarter, with guidance generally in line with market predictions.

Revenue

The total revenue of Applied Materials increased by 6.8% to $7.10 billion in 2025 Q2, up from $6.65 billion in 2024 Q2.

Earnings/Net Income

Applied Materials's EPS rose 26.9% to $2.64 in 2025 Q2 from $2.08 in 2024 Q2, marking continued earnings growth. Meanwhile, the company's profitability strengthened with net income of $2.14 billion in 2025 Q2, marking 24.1% growth from $1.72 billion in 2024 Q2. The EPS indicates strong performance in the current quarter.

Price Action

The stock price of Applied Materials has edged up 1.75% during the latest trading day, has jumped 12.02% during the most recent full trading week, and has surged 20.91% month-to-date.

Post-Earnings Price Action Review

The strategy of buying AMAT when revenue beats expectations and holding for 30 days has proven to yield promising results, with an observed gain of 10.77%. This approach highlights the potential for capitalizing on positive earnings surprises. Investors have historically reacted positively to AMAT's revenue performance, often resulting in significant stock price appreciation over the short term. This trend suggests that AMAT's ability to exceed revenue expectations serves as a reliable indicator of subsequent stock performance. However, investors should remain cautious as broader market conditions and other factors could influence future price movements. Overall, the strategy provides a solid framework for investors looking to maximize gains from AMAT's earnings announcements.

CEO Commentary

Gary Dickerson, President and Chief Executive Officer, stated that Applied Materials delivered strong results with record earnings per share, driven by exceptional execution and agility in operations. He emphasized that customer focus remains on being first-to-market with transformative technologies, particularly in AI, which is reshaping the semiconductor roadmap. Despite facing trade restrictions impacting the China market, the company grew faster than peers outside of China and expects continued low double-digit growth in its service revenues. He expressed confidence in the company's positioning at key device architecture inflections and the strength of its innovative product portfolio, reinforcing a positive outlook for sustainable growth.

Guidance

For fiscal Q3 2025, Applied Materials expects total revenue of approximately $7.2 billion, representing a 6% year-over-year increase at the midpoint, with non-GAAP earnings per share anticipated to be $2.35, reflecting an 11% increase year-over-year. Semiconductor Systems revenue is projected at about $5.4 billion, up approximately 10% year-over-year, while Applied Global Services revenue is expected to be around $1.55 billion, down 2% year-over-year. The company anticipates non-GAAP gross margin of approximately 48.3% and operating expenses of about $1.3 billion, maintaining a stable outlook despite the dynamic macro environment.

Additional News

Applied Materials has been active in strategic initiatives, including a significant investment in BE Semiconductor Industries, acquiring 9% of Besi's common stock to strengthen collaboration in hybrid bonding technology. The company also announced an increase in its quarterly cash dividend by 15% to $0.46 per share, payable on June 12, 2025, and a new $10 billion share repurchase authorization. This marks the eighth consecutive year of dividend increases, underlining Applied Materials' commitment to returning value to shareholders. Additionally, the company awarded its annual Supplier Excellence Awards, recognizing outstanding contributions in quality and sustainability within its operations. These developments reflect Applied Materials' strategic focus on enhancing shareholder value and advancing technology partnerships.