Applied Materials, semiconductor equipment supplier, expects quarterly revenue above estimates due to AI boom

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Applied Materials, semiconductor equipment supplier, expects quarterly revenue above estimates due to AI boom
Applied Materials, semiconductor equipment supplier, expects quarterly revenue above estimates due to AI boom

Applied Materials, a semiconductor equipment supplier, predicted higher-than-expected second-quarter sales due to sustained demand for advanced chips used in artificial intelligence.

Applied Materials, a semiconductor equipment supplier, anticipated higher-than-expected second-quarter sales on robust demand for advanced chips used in artificial intelligence and a comeback in the personal computer industry, driving its stock up 12% after the bell on Thursday.

Strong expenditure by cloud computing service providers, as well as the advent of AI-embedded personal PCs, are boosting demand for increasingly powerful chips and, hence, chip manufacturing equipment.

“There is a reacceleration of capital investment by cloud companies, fab utilization is increasing across all device types, and memory inventory levels are normalizing,” Applied Materials CEO Gary Dickerson said.

The company reported first-quarter revenue of $6.71 billion, above expectations, and stated that China sales of $3 billion accounted for 45% of overall revenue, up from 17% a year ago. Applied Materials manufactures semiconductor fabrication equipment and has customers such as Intel and Samsung.

The California-based company predicts second-quarter revenue of $6.5 billion, plus or minus $400 million, compared to analysts’ average estimate of $5.92 billion, according to LSEG data.

Applied Materials also forecasts an adjusted profit per share of $1.79 to $2.15, which is higher than the previous projection of $1.79.

Analysts believe that the need for stronger domestic semiconductor supply chains benefits businesses like Applied Materials and rival Lam Research.

In the midst of US-Sino tensions, governments throughout the world have urged chipmakers to increase domestic semiconductor production in order to lessen dependency on China and Taiwan.

The Justice Department was conducting a criminal investigation against Applied Materials late last year for transferring equipment to China’s leading chipmaker, SMIC, via South Korea without export licenses, according to sources.

Excluding adjustments, Applied Materials’ adjusted earnings for the quarter ended Jan. 28 were $2.13 per share, exceeding expectations of $1.91.

Its gross margin increased to 47.8% from 46.7% the year before.

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