Applied Materials’ stock dropped nearly 5 percent in premarket trading after its latest earnings report showed mixed results. The semiconductor equipment maker posted adjusted earnings per share of $3.50, surpassing analyst expectations of $3.40 and marking a 41 percent jump year over year. Revenues also climbed 25 percent to $9.12 billion, beating forecasts by more than $100 million.
However, the GAAP earnings told a different story. At $3.17 per share, they fell short of estimates, weighed down by a $220 million unrealized investment loss. Investors seemed unimpressed by this disparity, especially given the company’s stock had already plunged 30 percent in July following a solid rally that pushed it more than 100 percent higher for the year.
Q4 Outlook Surpasses Street Projections
Looking ahead, Applied Materials set a high bar with its fourth-quarter revenue guidance, forecasting $10.25 billion, well above the $9.55 billion analysts had anticipated. The company also expects adjusted earnings of around $4.02 per share, comfortably beating the $3.71 consensus. This aggressive outlook reflects continued strength in capital spending driven by AI and memory chip demand.
DRAM-related sales made up 26 percent of semiconductor systems revenue in the third quarter, up from 22 percent a year ago. The surge in AI workloads is fueling the need for more memory capacity, an area where Applied Materials is heavily invested. While foundry and logic equipment remain the backbone of their systems business, the rising importance of DRAM signals shifting market priorities.
