Applied Materials stock falls on Q4 outlook

Applied Materials (AMAT) reported third quarter adjusted earnings per share of $2.48 compared to a Bloomberg consensus estimate of $2.36. Revenue was just above expectations, $7.3 billion versus an expected $7.21 billion. However, the Q4 outlook fell short of what Wall Street was expecting. CEO Gary Dickerson saying in the release that “We are currently operating in a dynamic macroeconomic and policy environment, which is creating increased uncertainty and lower visibility in the near term, including for our China business."

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Video Transcript

00:00 Speaker A

Applied Materials third quarter results, they are just now crossing the wire, shares you can see, they're falling fast. Let's get you the numbers. Applied Materials, Q3 adjusted EPS 248. That's versus consensus of 236. So you got a bottom line beat. Let's look at net sales, 7.3 billion. Street was at 7.21 billion, so that's a beat as well. Now though, let's turn to the forecast. Q4 net sales, they're calling for between 6.2 and 7.2 billion. Consensus was at 7.32 billion, and that, Caleb, explains why we see the stock down a sharp 11% in the after hours.

01:04 Caleb

Yeah, you miss in this market, your stocks going to get punished. We've seen the misses get punished a lot more than those that are exceeding guidance. And in this sector right now, in the chip sector, whether you're an applied materials or an AMD or an Nvidia, you cannot miss your numbers and you can't guide lower because the investors are going to punish you for it.

01:31 Speaker A

Uh, a couple quick questions I I'd have on the call. One is key question would be China, just the back and forth there with trade policy. I'm very curious how executives talk about that on the call, Caleb. And then in terms of demand, I want to hear just where the strength is. Is it the machines that are making hey the the the fancy high-end AI processors we talks processors we talk so much about, or is it is it more auto industrial? Be interested to hear their talk on that as well.

02:08 Caleb

Yeah, they're heavy in that part of the market versus the high flying, high gross margin part of the market. That said, um, they are in the ecosystem right now. So demand is important. You also haven't heard their name mentioned in White House conversations, whether it's being able to do deals with China and give the US a 15% kicker. They're just not involved in the conversation. Right now it's about proximity to power for every company, basically, but especially for the chip makers because chips are the currency of the 21st century.

02:45 Speaker A

By the way, while I have you, as we're talking chips, what did you make about the uh the export tax for Nvidia and AMD, 15%?

02:58 Caleb

Uh I think it's a very slippery slope uh to be able to do this.

03:04 Speaker A

Yeah. Also because because you feel like who's next there?

03:08 Caleb

Who's next? But also, we're doing business with somebody who we've considered a national security adversary and allowing that chip making and that commerce to happen between borders as long as the US gets a little tariff on that, a little toll on that. I don't know if that's great practice. That said, that might be what it takes to be able to do business in the 21st century with this administration.

03:37 Speaker A

AMD down 11% here. We'll see how the call shakes up. Related Videos

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