Shares of Applied Materials rallied in extended trading Thursday after the semiconductor equipment leader projected quarterly results that surpassed analyst expectations, citing robust demand linked to artificial intelligence infrastructure spending.
The company anticipates second-quarter revenue of approximately $7.65 billion, plus or minus $500 million, with adjusted earnings per share around $2.64, give or take 20 cents. Both figures exceeded consensus estimates. For the first quarter, Applied Materials reported revenue of $7.01 billion and adjusted profit of $2.38 per share.
Chief Executive Gary Dickerson pointed to "the acceleration of industry investments in AI computing" as a primary growth driver. Chief Financial Officer Brice Hill highlighted record sales in the DRAM segment. Analyst Timm Schulze-Melander of Rothschild & Co. Redburn noted memory is becoming "a greater growth driver near-term." The positive guidance lifted sector peers Lam Research and KLA, with both stocks gaining nearly 3% in after-hours action.
In a separate development, the company disclosed a $252.5 million settlement with the U.S. Commerce Department's Bureau of Industry and Security, concluding a probe into certain exports to China and related compliance matters. Applied Materials agreed to enhance internal audits and training. The Justice Department and Securities and Exchange Commission have closed their related investigations without action.
Summit Insights analyst Kinngai Chan upgraded Applied Materials to "Buy" from "Hold," citing expected technology transitions in AI, smartphones, PCs, and the Internet of Things that should spur logic, foundry, and DRAM capital expenditure in 2026.
Despite the upbeat forecast, risks persist, including potential volatility in demand tied to China exposure and evolving U.S. export regulations. The market also remains sensitive to macroeconomic indicators, with traders awaiting the January U.S. Consumer Price Index report for clues on interest rate policy.
