Applied Materials Shares Dive 8.18% Amid Export Control Concerns and Tepid Forecast

On February 14, Applied Materials experienced a significant drop of 8.18%, hitting its lowest intraday price since January 2025. The semiconductor equipment giant recently provided a tepid forecast for its current quarter, attributing the cautious outlook to potential impacts from export controls. The company expects second fiscal quarter sales to reach approximately $7.1 billion, slightly below Wall Street's average estimate of $7.22 billion. Earnings per share (EPS) are anticipated to be $2.30, aligning with market expectations.

Brice Hill, the Chief Financial Officer of Applied Materials, indicated that the company has factored in potential challenges related to export restrictions. Additionally, the firm is facing financial implications from tax reforms in Singapore, impacting fiscal year 2025's books by roughly $644 million in expenses. Following the earnings announcement, shares fell about 5% in after-hours trading. Prior to the drop, the stock closed at $184.27, marking a 13% increase year-to-date.

In its Q1 fiscal year 2025 earnings report, Applied Materials revealed revenue of $7.166 billion, a 6.84% rise compared to the previous year's $6.707 billion. However, net profit saw a steep decline of 41.31%, amounting to $1.185 billion compared to last year's $2.019 billion. The company's basic earnings per share for the first fiscal quarter was $1.46, down from $2.43 a year earlier.

Founded in 1967, Applied Materials is a global leader in material engineering solutions, providing manufacturing equipment, services, and software to industries such as semiconductor and displays. The company leverages its diversified technological capabilities to enhance the performance, yield, and cost efficiency of its clients' equipment. Applied Materials’ customer base includes manufacturers of semiconductor chips, LCD, and OLED displays, as well as other electronic devices.

The company also noted the influence of tightened U.S. export controls to China, forecasting an annual revenue impact of $400 million, with half of this effect expected in the current quarter. For the second fiscal quarter, Applied Materials projects revenue around $7.1 billion and adjusted EPS in the range of $2.12 to $2.48, with the midpoint projection of $2.30 matching market expectations. The announcement underscores the company's strategic navigation through compliance challenges while maintaining a focus on sustained technological advancement and customer service excellence.