Applied Materials (NASDAQ:AMAT) Is Set to Beat Its Dot-Com Era Highs

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Applied Materials Inc. (NASDAQ:AMAT) set new records for both earnings and revenue in its second fiscal quarter, sending its shares up on May 18th.

The microchip manufacturer reported adjusted earnings of $0.79 per share in the three months ended April 30th, up 132% on a yearly basis and exceeding Wall Street expectations of $0.75 per share.

Net sales, meanwhile, grew 45% year over year to $3.55 billion, driven by strong segment performance, particularly from its semiconductor systems, which recorded $2.40 billion in revenues as opposed to $1.59 billion a year ago.


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“Across the company we have tremendous momentum as our markets are strong and getting stronger, and we’re sustainably growing faster than these markets by expanding our served opportunity and gaining share,” President and CEO Gary Dickerson said in a May 18th, release.

During the period, the company generated $898 million in cash from operations and returned $390 million to shareholders via stock repurchase programs and cash dividends.

Applied Materials’ long-term debt, however, rose to $5.30 billion as of April 30th, compared to $3.13 billion as of January 29th.

Outlook

For its fiscal third quarter, the company expects to report net sales of between $3.6 billion and $3.75 billion ranging from $0.79 to $0.87 EPS. The midpoints of these ranges would represent increases of about 30% and 66% year over year, respectively.

During Applied Materials’ earnings call, Dickerson said the company expects double-digit growth in dynamic random-access memory or DRAM, spending this year, while NAND investment is anticipated to be even stronger. He attributed this to market fundamentals remaining strong, which in turn will drive robust investment from its customers.

Dickerson is also optimistic about prospects for 2018 and beyond, fueled in part by what he described as an “explosion of data storage requirements.”

“Data generation from new categories, such as Industry 4.0 and autonomous vehicles, can potentially dwarf existing applications within a few years. As 3D NAND bit density increases and cost per bit falls, new segments of the storage market are opening up for solid-state drives,” the executive said.

Background

Headquartered in California’s Silicon Valley, Applied Materials is the leader in material engineering solutions used to produce microchips. The company has a market cap of $44.99 billion.

Its key shareholders include the Vanguard Group Inc., which held 73.4 million shares in the company valued at $2.85 billion as of the end of March.

Blackrock Inc. is also a large shareholder, which owned 67.0 million shares valued at $2.61 billion as of the same period.

Applied Materials ended the day trading at $43.91, up 2.69%.