🔬 Applied Materials: solid earnings, but geopolitics is taking its toll!
Applied Materials $AMAT, a key supplier of chip manufacturing equipment, reported mixed second quarter results last week. Although earnings per share beat expectations, sales fell slightly short. The main reason is uncertainty related to export restrictions to China, the company's largest foreign market.

📊 Q2 results:
Revenue: USD 7.10 billion (Expectations: USD 7.13 billion)

Earnings per share (non-GAAP): $2.39 (Expectation: $2.31)

Semiconductor Systems revenue: $5.26 billion (below expectations: $5.32 billion)

Only 25 % of sales come from China, compared to just a year ago. 43 %. This reflects the major impact of new US export regulations, which have severely restricted the supply of advanced manufacturing equipment to this particular market.

🌍 Geopolitics at play
According to analysts, the USrestrictions on the Chinese market are having a major impact on the company's current and future performance. While Applied Materials is benefiting from growing investment in advanced process nodes (e.g. 3nm and smaller chips)but is struggling in the short term with a cooling of investment in segments such as IoT, automotive and communications equipment.

🔮 Outlook:
Q3 revenue: US$7.20bn ± US$500m (consensus: US$7.19bn).

CFO Brice Hill said that despite all the volatility, he doesn't see a major drop in customer demand, which is key information. In the long term, spending on advanced chips is expected to grow, especially from 2025.

The company has the potential to benefit from the long-term megatrend of AI and advanced technologies, but will be under pressure from politics in the short term.

📈 What is your view on this company and technology restrictions against exporting to foreign countries?