Applied Materials’ Stock Falls 15% On Soft Guidance

Applied Materials’ (AMAT) stock is down 15% after the semiconductor equipment maker offered forward guidance that came up short of Wall Street’s expectations. For what was its fiscal third quarter, Applied Materials reported earnings per share (EPS) of $2.48 U.S., which was ahead of the $2.36 U.S. consensus expectation of analysts. Revenue in the period totaled $7.30 billion U.S., which was also ahead of the $7.22 billion U.S. anticipated on Wall Street. The company’s biggest division, its semiconductor systems, reported $5.43 billion U.S. in sales, beating estimates and representing a 10% increase from a year earlier. Despite the strong print, Applied Materials offered a disappointing outlook, sending its stock crashing lower. Management said that it expects $2.11 U.S. per share in earnings for the current quarter, which was lower than the consensus estimate of $2.39 U.S. a share. The company said it will likely report revenue of $6.70 billion U.S. this quarter versus $7.34 billion U.S. estimated among analysts. On an earnings call, Chief Executive Officer (CEO) Gary Dickerson said that the current macroeconomic environment is “creating increased uncertainty and lower visibility.” Dickerson added that Applied Materials’ China business has been particularly impacted by tariffs and related uncertainty. Applied Materials makes tools that microchip foundries such as Taiwan Semiconductor Manufacturing Co. (TSM) use to make chips and semiconductors. Most chip manufacturing, and Applied Materials’ tools, are made in Asia and subject to heightened U.S. tariffs. Management added that they have a large backlog of pending export license applications with the U.S. government, but that none of them are likely be issued in the current quarter. Prior to today (Aug. 15), AMAT stock had risen 15% on the year and was trading at $188.24 U.S. per share.