Applied Materials (NASDAQ:AMAT) stock gained over 12% in yesterday’s extended trading session. The upside can be attributed to better-than-expected results for the fiscal first quarter and upbeat Q2 guidance provided by the company.
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AMAT supplies equipment, services, and software used in the manufacturing of semiconductor chips.
Q1 Report in Detail
The company reported adjusted earnings of $2.14 per share in Q1, up 4.9% year-over-year. Also, it came above the consensus estimate of $1.90. Meanwhile, net revenue decreased marginally to $6.71 billion from $6.74 billion in the year-ago quarter but surpassed the Street’s expectations of $6.48 billion.
It is worth mentioning that China emerged as a significant growth driver, with revenues surging by 162% year-over-year and accounting for about 45% of the company’s total revenue. Also, revenue from Japan increased by 23.9%. The rise in revenue from these two regions partly offset the decline in sales in the U.S., Taiwan, and Europe.
Q2 Outlook
Applied Material’s performance is expected to benefit from a rise in investments by semiconductor companies in new production capacity due to the increasing demand for artificial intelligence (AI) chips.
The company expects to report adjusted earnings between $1.79 and $2.15 per share, compared with the consensus estimates of $1.80. Additionally, AMAT expects revenues to come in the range of $6.1 billion and $6.9 billion. The analysts are expecting sales of $6.34 billion.
What Is the Price Target for AMAT?
Overall, Wall Street analysts are currently sidelined on AMAT stock with a Moderate Buy consensus rating based on 16 Buys, five Holds, and one Sell assigned in the past three months. The average price target of $177.89 implies a 5.1% downside potential.
