Applied Materials 2025 Q3 Earnings Strong Earnings Growth with Cautious Outlook

Applied Materials (AMAT) reported its fiscal 2025 Q3 earnings on August 15, 2025. The company beat expectations with a 7.7% year-over-year revenue increase and an 8.3% rise in EPS. Despite the positive results, management issued a cautious Q4 outlook due to uncertainties in the China market.

Revenue
Revenue for Applied Materials in Q3 2025 rose to $7.30 billion, a 7.7% increase from $6.78 billion in the same period last year. The Semiconductor Systems segment led the performance with $5.43 billion in revenue. Applied Global Services followed closely, generating $1.60 billion. The Display segment contributed $263 million, while the smallest segment, Corporate and Other, reported $12 million. Collectively, these figures reflect a balanced revenue distribution across the company’s business lines.

Earnings/Net Income
Earnings per share increased to $2.23 in Q3 2025, a 8.3% rise from $2.06 in Q3 2024. The company’s net income also climbed by 4.3% to $1.78 billion compared to $1.71 billion the prior year. The continued growth in profitability highlights the company’s strong operational performance and cost management.

Price Action
The stock price of Applied Materials edged up 0.20% in the latest trading day and rose 2.78% over the past week. However, it fell 5.54% month-to-date, reflecting mixed investor sentiment.

Post-Earnings Price Action Review
A post-earnings strategy of buying shares after a revenue increase and holding for 30 days has historically delivered strong returns. Over the past three years, this approach achieved a total return of 77.80%, outperforming the benchmark by 30.51%. The strategy also posted a compound annual growth rate of 21.94% with no maximum drawdown, underscoring its effectiveness in managing risk while capturing returns.

CEO Commentary
CEO Gary E. Dickerson praised the company’s record Q3 performance, driven by robust demand in semiconductor systems and services. However, he warned of potential revenue and earnings declines in Q4 due to uncertainties in the China business. He emphasized Applied’s leadership in AI-driven innovations, including a partnership with Apple for U.S. manufacturing and advancements in advanced packaging and leading-edge logic. The company reported a 30% increase in revenue from gate-all-around transistors and a 50% growth in leading-edge DRAM revenue in fiscal 2025.

Guidance
CFO Brice A. Hill guided Q4 revenue to $6.7 billion ±$500 million, a 4.9% year-over-year decline at the midpoint. Non-GAAP EPS is expected at $2.11 ±$0.20, a 9% decrease from the prior year. Semiconductor Systems revenue is forecasted at $4.7 billion (down ~9% year-over-year), AGS at $1.6 billion (down 2%), and Display at $350 million (up year-over-year). The gross margin is projected at ~48.1%, with CAPEX at $584 million and $1.4 billion in shareholder returns in Q3.

Additional News
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