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Investing.com - Mizuho has lowered its price target on Applied Materials (NASDAQ:AMAT) to $200 from $220 while maintaining an Outperform rating after the company reported July quarter results and provided weaker-than-expected October quarter guidance. The semiconductor equipment maker, currently valued at $151 billion, trades at a P/E ratio of 22.9x and has demonstrated solid financial health according to InvestingPro analysis.
Applied Materials guided for October quarter revenue of $6.7 billion, below the consensus estimate of $7.32 billion, citing approximately $500 million in slower China revenues than expected and $500 million in slower Gate-All-Around (GAA) technology ramp, partially offset by $300 million better rest-of-world ICAPS performance. Despite near-term challenges, the company maintains strong fundamentals with a 48% gross margin and 36% return on equity, as revealed in InvestingPro’s comprehensive analysis, which includes 13 additional key insights available to subscribers.
The semiconductor equipment maker reported in-line results for the July quarter, with Mizuho estimating that Foundry/Logic revenue declined approximately 19% quarter-over-quarter while DRAM increased 23% and NAND fell 52% quarter-over-quarter, with High Bandwidth Memory (HBM) showing strength.
Mizuho lowered its fiscal 2025 GAA revenue estimate to $4.5 billion from $5 billion, though the company reiterated it maintains over 50% market share and sees a 30% revenue opportunity versus FinFET technology into 2026-2027.
Applied Materials stock fell approximately 14% in after-hours trading following the weaker guidance, with Mizuho noting the company "remains the #1 global SemiCap Equipment supplier with AI and HBM and has underperformed peers significantly." The company’s solid 6% revenue growth and strong cash flows that adequately cover interest payments suggest resilience despite market volatility. For detailed valuation metrics and growth prospects, investors can access the full InvestingPro Research Report, part of the platform’s coverage of over 1,400 US stocks.
In other recent news, Applied Materials reported mixed financial results that have caught the attention of several analyst firms. The company exceeded earnings per share estimates for the July quarter by 5%, but its outlook for the October quarter fell 11% short of expectations, largely due to challenges in China and fluctuations in leading-edge foundry and logic revenues. Despite these setbacks, Needham maintained a Buy rating with a $240 price target, citing confidence in the company’s long-term prospects. In contrast, UBS reduced its price target to $180, attributing the change to specific challenges faced by the company. Wolfe Research also adjusted its price target to $200 while keeping an Outperform rating, projecting a potential earnings power of $11 over time. Evercore ISI reiterated its Outperform rating with a price target of $209, acknowledging the earnings beat but noting the weaker guidance. Additionally, Stifel lowered its price target to $180, maintaining a Buy rating despite the company’s weaker-than-expected outlook for the fiscal fourth quarter. These developments reflect a range of analyst perspectives on Applied Materials’ financial health and future potential.
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