Applied Materials Q4 Earnings Preview: Semiconductor Systems, China Revenues On Watch

Applied Materials, Inc. AMAT is set to report its first-quarter earnings after Thursday's closing bell. Here's a look at what to expect in the report. 

What To Watch: The company's Semiconductor Systems segment will be on watch as AI-driven demand could reflect in its revenues. 

Wall Street will also be watching Applied Materials' China revenues which fell to 30% in the last quarter, down from 32% in the previous quarter and 40% before that. 

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Needham analyst Charles Shi noted that the company's first-quarter China revenues came in roughly flat at around $2.14 billion, “but still a meaningful step down” from the average run rate of $2.9 billion per quarter between the fourth quarter of 2023 to the second quarter of 2024, he added.

“Over the longer term, management sees that WFE (wafer fabrication equipment) intensity, propped up by the strong China demand of 18% in 2023, could decline and normalize to around 15%,” Shi further wrote.

Investors will look for growth in non-GAAP gross margins which Applied Materials guided to 48.4% for the first quarter, up from 47.5% in the previous quarter. 

Stifel analyst Brian Chin maintained a Buy rating on Applied Materials shares but lowered the price target from $250 to $235 on Tuesday heading into the first-quarter print. 

According to estimates from Benzinga Pro, analysts expect the company to report quarterly earnings of $2.29 per share on revenue of $7.14 billion. It should be noted that Applied Materials has beat consensus estimates on the top and bottom lines in each of the last ten consecutive quarters. 

AMAT Price Action:  According to data from Benzinga Pro, Applied Materials shares ended Wednesday's session down 1.26% at $180.89. 

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