Semiconductor equipment maker Applied Materials trounced Wall Street's targets for its fiscal second quarter and guided higher than views for the current period. But its cautious commentary gave AMAT stock investors pause.
The Santa Clara, Calif.-based company late Thursday said it earned an adjusted $2 a share on sales of $6.63 billion in the quarter ended April 30. Analysts polled by FactSet had expected earnings of $1.84 a share on sales of $6.39 billion. On a year-over-year basis, Applied Materials earnings increased 8% while sales rose 6%.
For the current quarter, Applied Materials predicted adjusted earnings of $1.74 a share on sales of $6.15 billion. That's based on the midpoint of its outlook. Wall Street had called for earnings of $1.66 a share on sales of $6.06 billion in the fiscal third quarter. However, the company's outlook translates to year-over-year declines of 10% in earnings and 6% in sales.
"Applied Materials delivered strong results in our second fiscal quarter with revenues and earnings in the high-end of our guidance range, and we expect to outperform our markets in 2023," Chief Executive Gary Dickerson said in a news release.
AMAT Stock Drops After Report
On the stock market today, AMAT stock retreated 2.3% to close at 126.95. During the regular session Thursday, AMAT stock rose 3.4% to 129.92.
Company executives warned of weak capital equipment spending plans by some chipmakers, especially memory-chip firms.
"Weakness in PCs and smartphones is a key factor for memory customers who have significantly reduced their investments in 2023," Dickerson said on a conference call with analysts.
He added, "In leading-edge foundry-logic, we have also seen customers trimming their spending plans for the year."
Applied Materials Is On Tech Leaders List
Applied Materials ranks fourth out of 29 stocks in IBD's semiconductor equipment industry group, according to IBD Stock Checkup. Shares hold an IBD Composite Rating of 98 out of 99.
IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. Further, the best growth stocks have a Composite Rating of 90 or better.
Also, AMAT stock is on the IBD Tech Leaders list.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
