applied

Applied Materials (AMAT 2.93%) was among several semiconductor equipment companies to gain last month, as the company, known for making equipment to produce chips and display panels, benefited from several macroeconomic and sector-level news items last month.

While there was no major company-specific news out on Applied Materials last month, the related items were enough to drive the stock up 27%, according to data from S&P Global Market Intelligence.

As you can see from the chart, much of the gains came in the middle of the month.

AMAT data by YCharts

A new semiconductor boom

While the artificial intelligence (AI) boom has propelled stocks like Nvidia to multibagger gains, the semiconductor equipment sector, which operates on a different cycle, has lagged behind due to weaker growth and challenges in areas like China.

However, investors responded positively to news out of the sector last month, indicating that a new spending cycle could be afoot in semiconductor equipment.

First, Applied Materials benefited from the Federal Reserve’s 25-basis point rate cut on Sept. 17, and its forecast for two more cuts over the rest of the year. Semiconductor equipment, such as what Applied Materials sells, tends to be very expensive, so lower rates should make it easier for the company to borrow money so they can buy products from Applied Materials. The stock gained 2.6% that day.

Applied Materials then jumped the following session after Nvidia and Intel announced their partnership. The move helped boost Applied Materials and its semi equipment peers, since Intel is a major fab, and Nvidia’s $5 billion investment into Intel was expected to fuel spending on chip equipment. It also improves Intel’s prospects over the long term. The stock jumped 6.5% that day. Applied Materials is a major supplier for Intel, and even received Intel’s EPIC Supplier Award this year.

Finally, Applied Materials jumped 5.4% on Sept. 22 after it received an upgrade to overweight from Morgan Stanley. The investment bank hiked its wafer fab equipment sales growth forecast from 5% to 10%, seeing increased demand in memory. As a result, it boosted EPS estimates for Applied Materials.

Image source: Getty Images.

What’s next for Applied Materials?

A strong earnings report from Micron toward the end of the month also seemed to boost Applied’s prospects.

Like ASML, Applied Materials’ business strength hasn’t been in question, but cyclical demand is a major factor, as revenue rose just 8% in its most recent quarter.

Still, the news around Intel and broader growth in AI is promising. If that momentum continues, Applied Materials has room to move higher.

Aug. 15 (UPI) — Applied Materials’ stock price slumped by double digits on Friday after the semiconductor equipment maker reported a projected decline in revenue amid tariff worries in China.

On the Standard and Poor’s 500 index, the company’s stock decreased 11% at the opening bell and was trading at $162.09, down 13.87%, at 2 p.m. Entering trading, Applied Materials was up more than 15% for the year. The stock reached $199.29 on July 15 with the record $235.99 in April 2024.

The company, based in Santa Clara, Calif., reported the sixth consecutive quarter of revenue growth, including $7.3 billion in the third quarter, but foresees a weaker situation in the next quarter. They initially projected $6.7 billion in revenue for the quarter.

“We are expecting a decline in revenue in the fourth quarter driven by both digestion of capacity in China and non-linear demand from leading-edge customers given market concentration and fab timing,” Brice Hill, senior vice president and CFO at Applied Materials, said. “We are navigating and adapting to the near-term uncertainties by leveraging our robust supply chain, global manufacturing footprint and deep customer relationships.”

CEO Gary Dickerson, during an earnings call with analysts, said the current macroeconomic situation and trade issues have fueled “increasing uncertainty and lower visibility,” mainly within its business in China.

In addition, he said their forecast does not account for pending export license applications and a substantial backlog of products.

Dickerson noted the easing of spending from customers, with Chinese clients cutting spending after increasing equipment manufacturing in the region.

President Donald Trump has proposed a 100% tariff on semiconductors and possibly a 300% rate. Exempt companies would be those with manufacturing facilities in the United States.

Applied Materials doesn’t make chips, and instead supplies equipment, services and software used by the makers of the chips. The company’s largest plant for logistics and logistics is in Austin, Texas.

On Monday, Trump extended a tariff pause until Nov. 10 on products sent to the United States from China. Originally, he threatened 145% duty, but it was later lowered to 30% plus the baseline tariffs imposed on nearly all U.S. trading partners. The baseline remains in effect.

In June, Trump announced a trade agreement with China over rare earth minerals. Under the deal, China would export rare earth minerals to the United States with both countries reducing their tariffs for 90 days. Rare earth minerals fuel energy sources for mobile devices and electric vehicles.

Despite uncertainty, Applied Equipment in its report wrote that “we remain very confident in the longer-term growth opportunities for the semiconductor industry and Applied Materials.

The company’s adjusted earnings of $2.11 per quarter was short of the $2.39 expected by LSEG.

Net income hit $1.78 billion, or $2.22 per share. One year ago, it was $1.71 billion, or $2.05 per share.

The gross margin was 48.8% compared with 47.3% one year ago, and the operating margin was 30.6% vs. 28.7% in 2024.

The company specializes in materials engineering solutions for semiconductors, flat panel displays and solar photovoltaic industries. The company’s revenue in semiconductor equipment is No. 1 in the world, followed by the Dutch company ASML.

Sales at all three Applied Materials units rose: Semiconductor Systems at $5.43 billion, Applied Global Services at $1.60 billion and and Display t a$263 million.

The company’s market capitalization is $151.06 billion. It was founded in 1967 as a startup.