Applied Materials Posts a Blowout Quarter, Q3 Outlook Tops Estimates


Applied Materials (AMAT) forecast better-than-expected adjusted earnings and net sales in the fiscal Q3 after Q2 (ended May 2) results topped consensus estimates. The chip maker’s outstanding performance was driven by a strong semiconductor business due to chip shortages.

Applied Materials’ Q2 adjusted earnings jumped 83% to $1.63 per share on a year-over-year basis and easily beat the Street estimates of $1.51 per share. Net sales rose 41% to $5.58 billion and outpaced analysts’ expectations of $5.41 billion.

Semiconductor Systems’ net sales grew 55% year-over-year, while Applied Global Services recorded 18% growth. Additionally, adjusted gross margin surged 310 basis points (bps), while adjusted operating margin was up 700 bps. (See Applied Materials stock analysis on TipRanks)

Applied Materials CEO Gary Dickerson said, “We are confident in our ability to outperform our markets as large, secular trends create sustainable demand for semiconductors and our leadership in materials engineering becomes increasingly critical to deliver new chip technologies.”

For the third quarter of Fiscal 2021, the company projects net sales and adjusted earnings to be in the range of $5.72 billion – $6.12 billion and $1.70 – $1.82 per share, respectively. Consensus estimates for revenues and earnings are pegged at $5.53 billion and $1.56 per share, respectively.

Following the fiscal Q2 results, Mizuho Securities analyst Vijay Rakesh increased the stock’s price target to $158 (21.3% upside potential) from $155 and maintained a Buy rating.

Rakesh said, “We continue to see AMAT well positioned and growing above the WFE market, with share gains driven by a strong product roadmap for fast-growing specialty markets in IoT, Comm, and Auto.”

Applied Materials shares have exploded 136.8% over the past year, while the stock still scores a Strong Buy consensus rating based on 17 Buys and 3 Holds. That’s alongside an average analyst price target of $159.60, which implies 22.5% upside potential to current levels.

Furthermore, TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Applied Materials, with 13.2% of investors increasing their exposure to AMAT stock over the past 30 days.

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