Applied Materials Reports Q4 Beat, Stock Falls On Soft Revenue Guidance: Retail Cautious

Semiconductor-equipment maker Applied Materials, Inc.'s ($AMAT) shares retreated in Thursday’s after-hours session despite a fourth-quarter beat.

Santa Clara, California-based Applied Materials reported quarterly non-GAAP earnings per share (EPS) of $2.32, up 9% year-over-year (YoY). The bottom-line result exceeded the consensus estimate of $2.19. 

Revenue rose 5% YoY to $7.05 billion, also ahead of the average analysts’ estimate of $6.96 billion.

The company had previously guided to $2-$2.36 in non-GAAP EPS and $6.93 billion, plus or minus $400 million, in revenue.

Revenue contribution from China fell from 32% in the third quarter to 30% in the fourth quarte

The non-GAAP gross margin expanded slightly both YoY and sequentially to 47.6%.

Gary Dickerson, president and CEO of Applied Materials, said, "Our portfolio of products and services uniquely positions us to enable our customers in their pursuit of AI and energy-efficient computing."

"As these key drivers of semiconductor innovation continue to grow in importance, the industry’s roadmap is becoming increasingly dependent on materials engineering, where Applied is the clear leader."

During the quarter, the company generated $2.58 billion in cash from operations and distributed $1.77 billion to shareholders.

Looking ahead, the company expects first-quarter non-GAAP EPS of $2.29, plus or minus $0.18, and revenue of $7.15 billion, plus or minus $400 million. 

This compares to the consensus estimate of $2.27 and $7.25 billion, respectively, according to Yahoo Finance.

Applied Materials stock ended Thursday’s after-hours session down 5.79% at $174.90. It is up over 15% for the year vis-a-vis the nearly 25% gain for the Invesco QQQ Trust ($QQQ).

Retail turned mixed following the quarterly report.

One pointed to the stock falling below the  $175 support in the after-hours session.

Another fretted over the negative impact of tariffs proposed by the incoming Trump administration. Asia accounted for 78% of Applied Materials’ revenue in the fourth quarter.

Some users on the Stocktwits platform did not see logic in the stock drop, citing  valuation. The forward P/E for the stock is 18.73, according to Yahoo Finance.

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