Applied Materials Posts Record Quarterly Results, Forecasts Q1 Revenue Above Estimates on AI Chip Demand

Applied Materials posted its biggest quarterly results on record, according to ChosunBiz, and forecast first-quarter revenue above Wall Street expectations, with the semiconductor equipment maker pointing to strong demand for advanced AI chips as the driver behind continued spending on its manufacturing tools, according to Reuters via Channel News Asia.

Record Quarter Tied to AI-Driven Chipmaking Demand

Fourth-quarter revenue and operating profit both hit record highs, up 53% and 114% respectively from a year earlier, according to ChosunBiz. The outlet reported that strong orders for advanced foundry, DRAM, and advanced packaging tools drove the results. Across the full fiscal year, ChosunBiz reported revenue rose 21% to $34.446 billion, operating profit climbed 34% to $11.087 billion, and net profit rose 44% to $10.088 billion.

Semiconductor Systems Leads the Growth

Fourth-quarter growth was led by the company's core Semiconductor Systems business, ChosunBiz reported, with segment revenue up 64% to $7.996 billion and operating profit up 117% to $3.101 billion, generating roughly 85% of total operating profit. Within that segment, foundry and logic accounted for 58% of revenue, DRAM 33% (up from 28% a year earlier), and flash memory 9%, and ChosunBiz reported that the company said it set all-time highs in both DRAM and advanced packaging. Applied Global Services, the maintenance and parts business, posted a 26% revenue increase to $1.896 billion, with operating profit up 33% to $578 million, per the same report.

Regional Revenue Growth

By region, ChosunBiz reported Taiwan revenue increased 59% to $2.916 billion, Korea revenue rose 49% to $1.811 billion, and China revenue climbed 35% to $2.642 billion.

Q1 Guidance Tops Analyst Estimates

Applied Materials forecast first-quarter revenue of around $11.10 billion, plus or minus $500 million, compared with the average analyst estimate of $10.89 billion compiled by LSEG data, according to Reuters via Channel News Asia. The fourth quarter itself beat expectations, with reported revenue of $10.41 billion against an analyst average estimate of $10.30 billion. Using those reported figures, the gap is $10.41 billion minus $10.30 billion, or $0.11 billion, roughly 1.07% above the estimate ((10.41 - 10.30) / 10.30 x 100). Shares of the Santa Clara, California-based company rose 3% in extended trading following the forecast, Reuters reported.

Management Outlook on Equipment Demand

On a conference call after the earnings release, CEO Gary Dickerson said demand for advanced semiconductors still far exceeds supply and that closing the gap will require years of investment in new production facilities, according to ChosunBiz. The company said it expects wafer fab equipment demand to increase more than 30% year over year next year, with advanced foundry and logic, DRAM, and advanced packaging expected to account for about 75% of wafer fab equipment market growth through 2030, per the same report. ChosunBiz also noted that the pace of market growth will depend on how quickly fab construction and equipment supply chains scale up, an important qualifier on an otherwise bullish outlook.

Bottom Line

Applied Materials closed its fiscal year with record quarterly revenue and profit, driven by broad-based strength in foundry, DRAM, and advanced packaging equipment orders tied to AI chip production, and it is guiding for further revenue growth into the new fiscal year above where analysts had expected. Management's own framing, that demand still exceeds supply but that supply-chain scaling will govern how fast the market can actually grow, is a useful tempering note for readers assessing how durable this growth trajectory may be.