Applied Materials Falls Over 10% After Missing Q4 Estimates and Citing Uncertainty in Macroeconomic Environment

In an unexpected turn of events, Applied Materials shares plunged over 10% during extended trading on Thursday, following the release of the company’s fourth-quarter outlook that fell short of expectations.

A comparison of Applied Materials’ third-quarter earnings with analyst projections from LSEG reveals the following discrepancies:

– The company anticipates adjusted earnings per share of $2.11 for the current quarter, lower than the estimated $2.39 by LSEG.
– Revenue expectations stand at $6.7 billion, a significant drop from LSEG’s estimated $7.34 billion.

CEO Gary Dickerson attributed these shortcomings to the prevailing macroeconomic and policy climate, which he described as creating “increased uncertainty and lower visibility.” He specifically highlighted the impact on Applied Materials’ China business due to this uncertainty.

The potential doubling of tariffs on imported chips by the Trump administration could significantly affect Applied Materials, a company that specializes in manufacturing tools for chip foundries across Asia.

In a statement, the finance chief revealed expectations of a decrease in revenue during the fourth quarter. This decline is attributed to capacity digestion in China and non-linear demand from leading-edge customers due to market concentration and fab timing.

Applied Materials reported net income of $1.78 billion, or $2.22 per diluted share, for the third quarter compared to $1.71 billion, or $2.05 per diluted share, in the same period last year.

The semiconductor systems division, Applied Materials’ most significant segment, reported sales of $5.43 billion, surpassing estimates and marking a 10% rise from the previous year.

Applied Materials has recently gained recognition from President Donald Trump following its inclusion in Apple’s program aimed at increasing chip manufacturing in the U.S. Apple announced plans to collaborate with Applied Materials to expand manufacturing equipment production in Austin, Texas.

For further insights into this collaboration and Apple’s $100 billion U.S. spending expansion, watch our video “Apple and Trump detail $100 billion U.S. spending expansion: Here’s what to know.”