Updated version 2 - Driven by strong demand for artificial intelligence chips, Applied Materials expects quarterly revenue to exceed expectations

Added CEO's remarks from the earnings call in paragraphs 8-9, added analyst comments in paragraphs 4-5, and included charts and detailed information throughout the article.

Prathik Jayaprakash

Reuters, November 12 - Applied Materials (AMAT.O) on Thursday forecast that its fiscal first quarter revenue would surpass Wall Street expectations, as the company bets that strong demand for advanced AI chips will continue to drive spending on its semiconductor manufacturing equipment.

As a key supplier of wafer manufacturing equipment, the company is benefiting from increased spending by chipmakers to meet the exceptionally strong, AI-driven demand for chips and memory.

In after-hours trading, the company’s share price rose slightly. So far this year, the stock is up about 48%.

“Real market signals show that demand remains very strong,” said Bob O’Donnell, chief analyst at TECHnalysis Research.

He added that Applied Materials’ results show that chipmakers and foundries are “buying as much equipment as they possibly can.”

The Santa Clara, California-based company saw its semiconductor systems business revenue surge to $8 billion in the fourth quarter, up about 64% from a year earlier.

The company is one of the partners in Apple’s “Made in America” initiative, a program that includes work at Applied Materials’ Austin, Texas factory to boost the output of U.S.-based chipmaking equipment.

“We expect 2027 to be another record year for the market and for Applied Materials,” CEO Gary Dickerson said on the earnings call.

He noted that demand for wafer fab equipment is projected to grow by more than 30%, and that customers want to receive equipment as early as possible rather than delaying.

China accounted for 25% of fourth quarter revenue, down from 29% a year ago, though sales in the region grew about 35% to $2.64 billion.

According to data compiled by London Stock Exchange Group (LSEG), the company forecast quarterly revenue of approximately $11.1 billion (plus or minus $500 million), compared with analysts’ average estimate of $10.89 billion.

The company reported adjusted earnings per share for the fourth quarter at $4.16, beating the analysts’ average expectation of $4.05.

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