Applied Materials Inc (NASDAQ:AMAT, XETRA:AP2) shares fell about 4% on Friday even after the chipmaking equipment supplier beat Wall Street estimates on both revenue and profit for its fiscal third quarter and issued fourth-quarter guidance above expectations.
The Santa Clara, California-based company reported revenue of $9.12 billion for the quarter, up 25% year-over-year and ahead of analyst estimates of $8.99 billion.
Adjusted earnings per share came in at $3.50, a 41% increase from a year earlier and above the $3.39 consensus estimate.
For the fourth quarter, Applied Materials guided for revenue of $10.25 billion, plus or minus $500 million, well above the $9.54 billion analysts had expected. The company forecast adjusted earnings per share of $4.02, plus or minus $0.20, versus a Street estimate of $3.69.
By segment, Semiconductor Systems generated net revenue of $7.04 billion, while Applied Global Services brought in $1.78 billion. The Other segment posted $294 million, up 7% year-over-year.
The July quarter's outperformance was driven in part by record Foundry and Logic revenue of $4.72 billion, up 18% quarter-over-quarter, as customers transition to gate-all-around transistor architecture and add capacity at leading-edge FinFET nodes. NAND revenue more than doubled quarter-over-quarter to $493 million, while DRAM revenue rose 6% to $1.83 billion.
Analysts at Jefferies raised their estimates following the report, projecting that Semiconductor Systems growth for calendar 2026 will move above 40%, with another strong growth year expected in 2027.
The firm noted that Applied Materials' customer visibility now extends through calendar 2030, with the company planning to double its production capacity by calendar 2028 and evaluating further increases to meet demand beyond that.
Jefferies named Applied Materials its favorite semiconductor equipment stock, citing its positioning across leading-edge foundry and logic, DRAM and advanced packaging.