Applied Materials forecast third-quarter revenue and profit below estimates, signaling that supply bottlenecks, exacerbated by the COVID-19 lockdowns in China, would hamper its ability to meet the demand for its chipmaking tools.
A semiconductor and parts shortage for machines used to produce chips has been pressuring the broader chip supply chain that is already facing more demand than chipmakers are able to meet.
“We anticipate our ability to fulfill this demand will remain constrained by ongoing supply chain challenges in the near term with incremental improvements beginning in our fourth quarter,” said Chief Executive Officer Gary Dickerson in an earnings call on Thursday.
Applied Materials provides manufacturing equipment and process technologies used in semiconductor chip production. Its customers include chipmaking giants like Intel (INTC), Samsung Electronics (SMSN), and Taiwan Semiconductor Manufacturing (TSM). The reported results are for the three months ended May 1.
Earning Highlights
The Santa Clara, Calif.-based company earned an adjusted $1.85 a share on sales of $6.25 billion in the quarter ended May 1. Analysts polled by FactSet expected Applied Materials earnings of $1.90 a share on sales of $6.35 billion. On a year-over-year basis, the company’s earnings rose 13% while sales climbed 12%.
Applied Materials’ report follows an earnings beat by Apple on Thursday, April 28, 2022, who reported EPS of $1.52 on revenue of $97.28B, compared to forecasts EPS of $1.42 on revenue of $94.03B.
For the second quarter, the company reported an adjusted profit per share of $1.85 and revenue of $6.25 billion, both of which fell short of Wall Street estimates.
Sales in its display and adjacent markets segment rose 1.6% to $385 million in the quarter ended May 1.
Demand for Applied Materials’ products and services has never been stronger, yet we remain constrained by ongoing supply chain issues,” said Gary Dickerson, President, and CEO.
“Our priority is to work quickly and creatively across the supply chain to bring more industry capacity online while accelerating the technology inflections that we believe will enable Applied to outgrow the semiconductor market in the years ahead.”
AMAT Stock Drops, amid an outlook
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For the current quarter, Applied Materials forecast adjusted earnings of $1.77 a share on sales of $6.25 billion. That’s based on the midpoint of its outlook. Wall Street had predicted earnings of $2.04 a share on sales of $6.68 billion.
For Q3, Applied Materials anticipates revenue of $6.25 billion, give or take $400 million, which works out to a range of $5.85 billion to $6.65 billion.
However, Wall Street is expecting revenue of $6.68 billion for the quarter. While Applied Materials guided adjusted EPS in the band of $1.59 to $1.95, the consensus estimate calls for EPS of $2.04.
