What's Going On With Applied Materials Stock Today?

Applied Materials, Inc. AMAT shares are trading lower in the premarket session on Friday after ending yesterday’s run with a mild 1.59% slump.

On Thursday after the bell, the company reported second-quarter results of 2024, where the company generated $1.39 billion in cash from operations and distributed $1.09 billion to shareholders, including $820 million in share repurchases and $266 million in dividends.

Check This Out: Applied Materials Q2 Earnings: Revenue Beat, EPS Beat, Positioned For Growth In AI, EVs, Clean Energy And More

The company serves as a key supplier to major players in the industry, including Taiwan Semiconductor Manufacturing Company Ltd. TSM, Samsung Electronics Co SSNGY, and Intel Corporation INTC. This positions its outlook as a significant indicator of demand within a vital segment of the electronics supply chain, Bloomberg reported.

According to Benzinga Pro, Applied Materials’ second-quarter revenue was flat on a year-over-year basis to $6.646 billion, which beat the consensus estimate of $6.537 billion.

The company is experiencing an increasing demand for machines utilized in the production of artificial intelligence processors, Bloomberg added. However, certain customers involved in semiconductor manufacturing for ICAPS (Internet-connected appliances, communications, automotive, power, and sensors) are temporarily halting orders as they focus on installing the machinery they have already received.

Applied Materials reported adjusted earnings of $2.09 per share, beating analyst estimates of $1.99 per share.

Applied Materials sees third-quarter revenue of $6.65 billion, plus or minus $400 million, versus estimates of $6.576 billion. The company expects third-quarter adjusted earnings to be between $1.83 and $2.19 per share, versus estimates of $1.98 per share. 

“Near term, there will be some digestion,” Chief Executive Officer Gary Dickerson said in a phone interview to Bloomberg. “This year is not going to be significant growth year for us.”

Last quarter, China constituted 43% of the company’s revenue. Similar to some counterparts, Applied Materials is capitalizing on significant investments made by Chinese firms, reflecting the country’s endeavor to enhance its self-sufficiency in the manufacturing of crucial electronic components, according to Bloomberg.

Although U.S. companies face limitations in providing the most cutting-edge manufacturing equipment to China, they are experiencing a surge in orders for machinery used in producing less complex chip types, such as semiconductors commonly used in automotive and industrial machinery, the report added.

“We see China staying resilient,” Dickerson told Bloomberg. Still, he added, “you’re not going see the growth rate you’ve seen over the last couple of years.”

Price Action: AMAT shares are trading lower by 1.01% to $211.87 premarket at last check Friday. 

Image: Courtesy of Applied Materials, Inc.