🛠️ Applied Materials surprises on earnings, but stock falls on fears of sales decline in China! 📉
Applied Materials $AMAT, a key player in the semiconductor equipment industry, posted better-than-expected results for its fiscal first quarter 2025. Still, the stock fell by more than 8 %. The outlook for the next period was worrisome, especially due to export restrictions to China.
📌 Key financial results for Q1:
Revenue: $7.17 billion (vs. expectations of $7.15 billion) 📈
Earnings per share (EPS): $2.38 (vs. expectations of $2.29) 💰
China sales: $2.24 billion (33% of total sales, 45% last year)
⚠️ Negative factors:
Q2 outlook: revenue expected to be USD 7.1 billion (vs. market expectation of USD 7.2 billion)
Impact of export restrictions: Company expects a USD 400 million reduction in sales in 2025
Regulatory Risk: The U.S. government has restricted semiconductor technology exports to China, hampering growth
💡 What does Applied Materials actually do?
Applied Materials is a global leader in chip manufacturing equipment and technology. Its machines enable thin film material deposition, chip etching and transistor manufacturing. With the growing push for advanced chips and AI computing power, this company is a key player in the technology ecosystem.
📈 AMAT's strengths:
Long-term demand for semiconductors through AI, cloud computing and autonomous vehicles
Robust free cash flow - enabling research investments and share buybacks
Expansion outside China - company diversifies into other markets to reduce the impact of regulations
🔮 Obstacles along the way:
Restricting exports to China is a key factor - China accounted for almost a third of AMAT's sales , which means a big hit. But the company is looking for alternative markets and investing in new technologies.
Competitive pressure - firms like ASML and Lam Research are also battling regulations, which will affect the entire industry.
Long-term opportunity - with the expected growth of AI and advanced chips, AMAT can still benefit from megatrends in technological advancements.
What's your take on this company?
In addition to $ASML and $AMAT, $KLAC can be quite interesting, which is also quite cheap now.
China could be a big risk, I would be careful of that. I only have $ASML so far.
The company doesn't look bad. The question is the China thing, as that makes up a pretty big part of the revenue.
I have $ASML in my portfolio, but $AMAT is pretty cheap right now and the results look good.