Applied Materials Faces Sharp Decline as Revenue Forecast Misses Mark
1min read On November 15, Applied Materials (AMAT) faced a significant decline, falling 9.20% and reaching its lowest intraday price since February 2024. This movement was largely driven by the company's disclosure of a revenue forecast that did not meet market expectations, indicating potential delays in orders from some semiconductor customers.
In its latest announcement, Applied Materials projected its first fiscal quarter sales to reach approximately $7.15 billion, slightly below analysts' average forecast of $7.25 billion. Despite achieving better-than-anticipated earnings per share at $2.32, surpassing the forecasted $2.19, the shortfall in sales projections has raised concerns over market confidence.
The downward revision came as Applied Materials reported a 5% revenue increase for the fourth quarter, climbing to $7.05 billion, which exceeded previous estimates of $6.95 billion. Industrial equipment and automotive chip manufacturers have reported sluggish demand, a factor potentially impacting the semiconductor equipment sector, despite the robust demand driven by AI computing investments.
Furthermore, the company's revenue from China showed a significant decline, with sales from the region comprising 30% of the total in the fourth quarter compared to 44% the previous year. While China remains an important market, this adjustment reflects a shift towards a more sustainable economic relationship with the region.
Following the announcement, Applied Materials' shares fell about 5% in after-hours trading. Despite this, the company's CEO, Gary Dickerson, remains optimistic about the growth driven by artificial intelligence and innovative chip technologies. He maintains confidence in AI as a critical driver for industry advancement, emphasizing the company's commitment to delivering cutting-edge products and services.
Applied Materials serves significant industry players such as TSMC, Samsung Electronics, and Intel. As these customers typically order equipment well before production, Applied Materials' forecasts are often seen as a barometer for future demand. The downward revision has introduced potential challenges and uncertainties for the semiconductor manufacturing equipment industry in the near term.