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Applied Materials Q3 Earnings Beat Estimates, Forecasts Strong Q4

Strong demand for AI chips drives Applied Materials' growth

Key Takeaways:

• Applied Materials reported better-than-expected Q3 results, driven by demand for AI.
• The company forecast Q4 revenue above Wall Street estimates, anticipating a surge in demand for its chip-making equipment.
• Applied Materials benefited from the race for AI leadership, which is fueling growth in the semiconductor industry.

Applied Materials (NASDAQ: AMAT), a leading manufacturer of semiconductor equipment, reported stronger-than-expected results for the fiscal third quarter, fueled by the race for artificial intelligence (AI) leadership.

The company's revenue rose 7% year-over-year to $6.75 billion, exceeding analysts' estimates of $6.65 billion. Net income increased 12% to $2.01 billion, or $1.96 per share, surpassing expectations of $1.91 per share.

The demand for AI chips, used in applications such as natural language processing and machine learning, is driving growth for Applied Materials. The company's semiconductor equipment is essential for manufacturing these chips.

For the fourth quarter, Applied Materials forecast revenue between $6.85 billion and $7.15 billion, above Wall Street estimates of $6.76 billion. The company anticipates a continued surge in demand for its chip-making equipment.

Analysts are optimistic about Applied Materials' prospects. Stifel Nicolaus analyst Brian Chin maintained a Buy rating on the stock, with a price target of $140.

"Applied Materials continues to benefit from the secular growth trends in AI and cloud computing," Chin wrote in a research note.

Reuters reported that Applied Materials attributed its strong performance to the "race for AI" and the company's "unique position" in the semiconductor industry.

At the Semicon West 2024 event, Applied Materials discussed the state of the chip industry and debuted two breakthrough engineered materials.

Applied Materials is scheduled to release its full third-quarter financial results on August 15.