The semiconductor equipment maker reports strong results amid chip shortage
Applied Materials (AMAT), the world’s largest supplier of semiconductor manufacturing equipment, delivered a beat-and-raise earnings report for its fiscal first quarter on Thursday. The company posted adjusted earnings of $2.13 per share on revenue of $6.71 billion, surpassing the consensus estimates of $1.90 per share on revenue of $6.48 billion. The company also raised its guidance for the current quarter, projecting adjusted earnings of $2.25 to $2.45 per share on revenue of $7.1 billion to $7.5 billion, well above the analysts’ expectations of $2.01 per share on revenue of $6.67 billion.
The company attributed its strong performance to the robust demand for its products and services across all its segments and regions, as the semiconductor industry faces a global chip shortage that has affected various sectors, such as automotive, consumer electronics, and cloud computing. The company said that it is investing in its capacity and innovation to meet the growing and evolving needs of its customers, who are ramping up their production and developing more advanced and complex chips.
The company sees multiple growth drivers for its business
Applied Materials said that it sees multiple growth drivers for its business in the near and long term, as the semiconductor industry undergoes a structural shift and a technology inflection. The company said that the chip shortage has highlighted the importance and value of semiconductors, which are essential for enabling the digital transformation of the economy and society. The company also said that the chip industry is facing new challenges and opportunities, as the traditional Moore’s Law scaling becomes more difficult and costly, and as new architectures and materials emerge to enhance the performance, power, and functionality of chips.
The company said that it is well-positioned to capitalize on these trends, as it has a broad and diversified portfolio of products and services that cover the entire chipmaking process, from design to manufacturing to testing. The company said that it has a competitive edge in providing integrated solutions that combine hardware, software, and artificial intelligence to optimize the yield and quality of chips. The company also said that it has a strong presence in the fast-growing markets of memory, logic, foundry, and display, where it has established long-term and strategic partnerships with the leading chip and display makers.
The company rewards its shareholders with dividends and buybacks
Applied Materials said that it is committed to returning capital to its shareholders, as it announced a 9% increase in its quarterly cash dividend to $0.28 per share, payable on June 15, 2024, to shareholders of record as of May 25, 2024. The company also said that it repurchased $1.5 billion worth of its common stock in the first quarter, and that it has $5.5 billion remaining in its current share repurchase authorization.
The company’s stock reacted positively to its earnings report, as it soared more than 10% in after-hours trading on Thursday, reaching a new all-time high of $206.60. The stock had already gained 0.8% in the regular session, closing at $187.66. The stock has been on a bullish run since November 2021, when it broke out of a double-bottom base with a buy point of $148.40. The stock is currently ranked No. 1 on the IBD Tech Leaders list, which features the top-performing technology stocks in the market.