Applied Materials is set to report fiscal third-quarter earnings Thursday after the market closes, with investors looking for signs that booming investment in artificial intelligence continues to drive demand for semiconductor manufacturing equipment.
The company reports Thursday, Aug. 13, and Wall Street is expecting another strong quarter. Analysts expect Applied Materials to report revenue of approximately $9.0 billion, up more than 23% from a year earlier, with earnings projected at roughly $3.39 per share, an increase of nearly 37% year over year, according to Kiplinger.
Those expectations follow a strong fiscal second quarter, in which Applied Materials reported revenue of $7.91 billion, up 11% from the prior year, while GAAP earnings rose 33% to $3.51 per share and net income reached $2.81 billion, the company said.
The bigger story for investors is AI. Applied Materials makes the sophisticated equipment used to manufacture semiconductors, placing the company near the beginning of the AI supply chain. Massive investment in data centers and AI accelerators has increased demand for advanced logic chips, high-bandwidth memory and advanced packaging — areas that require increasingly complex manufacturing equipment. That makes the company a closely watched indicator of whether AI-related capital spending continues to work its way through the broader semiconductor industry.
Investors will also be watching China, which has historically represented a significant share of Applied Materials’ business. China accounted for about 30% of revenue in the company’s fiscal first quarter, according to Applied Materials, making U.S. export restrictions and trade policy an important risk. The company has already warned that tighter U.S. export restrictions will affect its ability to sell and service certain semiconductor equipment in China. The question Thursday will be whether growth elsewhere — particularly spending on leading-edge logic, DRAM and AI-related capacity — is strong enough to offset those restrictions.
Applied Materials enters the report with considerable momentum, with analysts looking for both revenue and earnings growth above 20%, setting a relatively high bar for the company.
Guidance could ultimately matter more than the quarterly numbers themselves. If Applied Materials indicates that semiconductor manufacturers are continuing to accelerate spending on AI-related capacity, it would offer another bullish signal for the broader semiconductor equipment industry. A slowdown in orders or a cautious outlook, on the other hand, could raise questions about how quickly the industry’s AI capital-spending cycle can continue.
For investors trying to gauge the durability of the AI boom, Applied Materials’ report Thursday may be one of the more closely watched earnings releases of the week.