Applied Materials Plunges 5.78% on Mixed Earnings

Applied Materials drop 5.78% in pre-market on May 16, 2025.

Applied Materials, a leading provider of materials engineering solutions for the semiconductor, display, and related industries, reported its fiscal second-quarter earnings on May 15, 2025. The company's revenue for the quarter was $71 billion, a 7% increase year-over-year, but slightly below analysts' expectations of $71.3 billion. The adjusted earnings per share were $2.39, exceeding the consensus estimate of $2.31.

The semiconductor systems segment, which is a key revenue driver for Applied Materials, generated $52.6 billion in revenue, falling short of the analyst consensus of $53.2 billion. The company attributed this shortfall to a slowdown in investment in the ICAPS market, which includes the Internet of Things, communications, automotive, power, and sensors. However, significant investments in advanced process chips partially offset this decline.

Looking ahead, Applied Materials expects third-quarter revenue to be around $72 billion, with a potential variance of $5 billion. This forecast aligns with market expectations, although some analysts had projected higher figures. The company also anticipates earnings per share of approximately $2.35 for the upcoming quarter.

Applied Materials is navigating a challenging environment due to trade restrictions and export controls, particularly in China, which was once a significant contributor to its global revenue. The company's management remains optimistic about the long-term prospects, citing strong demand for high-end semiconductor manufacturing equipment driven by advancements in AI and other technologies. Despite these challenges, the company's financial performance and strategic positioning suggest a resilient outlook for the future.