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Investing.com - Bernstein SocGen Group lowered its price target on Applied Materials (NASDAQ:AMAT) to $195 from $210 while maintaining an Outperform rating, citing uncertainty about future wafer fabrication equipment (WFE) spending. According to InvestingPro data, the company maintains strong financial health with a 48% gross profit margin and impressive 36% return on equity.
The semiconductor equipment maker reported fiscal third-quarter results that exceeded expectations, with revenue of $7.302 billion and earnings per share of $2.48, compared to analyst estimates of $7.215 billion and $2.36, respectively. The company’s strong performance contributes to its 6% year-over-year revenue growth and a healthy P/E ratio of 19.65.
Applied Materials saw solid equipment sales with leading-edge foundry and logic segments offsetting declines in ICAPS (IoT, Communications, Automotive, Power, and Sensors), while DRAM weakness was counterbalanced by strength in NAND memory. The company’s services and display businesses also performed above expectations.
China revenue increased significantly, rising approximately 10 percentage points quarter-over-quarter to about 35% of total revenue, reflecting similar trends observed across the semiconductor equipment sector this earnings season.
Despite the strong results, Bernstein indicated that Applied Materials and the broader semiconductor equipment sector will likely "tread water" until there is greater clarity about WFE spending for 2026 and beyond, though the firm remains positive on the company’s long-term positioning.
In other recent news, Applied Materials has provided guidance for its October quarter, projecting revenue of $6.70 billion and earnings per share of $2.11. This forecast falls short of consensus estimates, which anticipated revenue of $7.32 billion and earnings per share of $2.38. Several analysts have responded by adjusting their price targets for the company. Cantor Fitzgerald and Mizuho both lowered their price targets to $200, citing weaker-than-expected guidance and specific challenges in China. UBS also reduced its price target to $180, attributing the decrease to company-specific issues rather than industry-wide trends. Meanwhile, Wolfe Research adjusted its price target to $200, maintaining an Outperform rating and noting a potential path to $11 in earnings power over time. Despite these adjustments, Needham maintained a price target of $240, reiterating a Buy rating despite acknowledging the earnings miss. These developments highlight varied analyst perspectives on Applied Materials’ future performance.
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