Applied Materials Inc AMAT shares are down in early trading on Friday, after the company reported on Thursday its fiscal second-quarter results.
The announcement came amid an exciting earnings season. Here are some key analyst takeaways.
Analyst Harlan Sur maintained an Overweight rating, while cutting the price target from $240 to $210.
Applied Materials reported its quarterly revenue at $7.1 billion, down 1% sequentially but higher by 7% year-on-year, Sur said in a note. The revenue came in line with the consensus estimate, with all segments recording year-on-year growth, he added.
The company’s non-GAAP gross margins, at 49.2%, was above the consensus of 48.4%, driving non-GAAP earnings to $2.39 per share, surpassing the consensus of $2.31 per share, the analyst stated.
“Despite in-line results/guidance, we are lowering our FY/CY25 revenue/EPS estimates as we account for a weaker second half demand profile driven by tariff/trade related dynamics for the overall semi/semicap industry,” he further wrote.
Analyst Vivek Arya reaffirmed a Buy rating and price target of $190.
Despite robust trends, Applied Materials’ trailing-edge exposure being higher than peers is expected to be a drag on growth through the rest of the year, Arya said. This is “mainly tied to moderating China mix,” he added.
While the company’s 2025 sales estimates are “largely unchanged, we lower CY26 by 3% given softer trailing-edge WFE and AGS trends,” the analyst wrote. He further noted that Applied Materials’ growth has been more consistent than peers over the past five years and its stock is trading at a discount to peers, despite its robust free cash flow growth and capital returns.
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Analyst C.J. Muse maintained an Overweight rating and price target of $200.
Applied Materials was expected to report a beat and raise quarter, Muse said. However, its results were mixed and its revenue guidance for the fiscal third quarter was only in line, he added.
Management indicated “a generally unchanged WFE outlook, domestic China now normalizing at mid-20s percentage of revenues post trade restrictions, and tariffs largely a longer-term non-issue given the company’s global manufacturing footprint,” the analyst wrote.
The company is likely to generate at least 5% growth this year, with Semiconductor System revenues mostly balanced in the first and second half of the year, he further stated.
Analyst Charles Shi reiterated a Buy rating and price target of $195.
Applied Materials’ China revenue declined to only 25% of total revenues in the fiscal second quarter, Shi said. The midpoint of the company’s revenue guidance for the fiscal third quarter, at $7.20 billion, missed consensus estimate of $7.22 billion, he added.
Management did not provide any guidance for the back half of the year, which comprise of “two important quarters for investors to judge C2H25 WFE trend,” the analyst stated. “The lack of C2H outlook is not ideal, especially at this important juncture of elevated macro uncertainties,” he further wrote.
AMAT Price Action: Shares of Applied Materials had declined by 6.66% to $163.12 at the time of publication on Friday.
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