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Investing.com -- Applied Materials Inc. reported third-quarter results above Wall Street expectations on Wednesday but forecast a steeper-than-expected revenue drop for the current quarter, sending its stock tumbling more than 14% in premarket trading Friday.
The chipmaking equipment supplier posted earnings of $2.48 per share for the quarter ended July, compared with analysts’ estimates of $2.36.
Revenue rose to $7.3 billion from $7.22 billion expected.
For the fourth quarter, Applied Materials expects earnings of $1.91 to $2.31 per share and revenue of $6.2 billion to $7.2 billion, both below consensus estimates.
“We are currently operating in a dynamic macroeconomic and policy environment, which is creating increased uncertainty and lower visibility in the near term,” said CEO Gary Dickerson.
CFO Brice Hill said the weaker outlook reflects “digestion of capacity in China and non-linear demand from leading-edge customers given market concentration and fab timing.”
Stifel analysts said the soft revenue guidance "reflects digestion in China and lower leading-edge foundry/logic, partially offset by higher ICAPS (ex-China)."
"We expected leading-edge momentum to slow, albeit less abruptly, and for China shipments to not be so F3Q-weighted," they added.
The broker trimmed its price target on the stock to $180 from $195.
(Additional reporting by Vahid Karaahmetovic.)