Applied Materials, Inc. (NASDAQ:AMAT) beat reported adjusted fiscal Q2 earnings of 79 cents a share on revenue of $3.55 billion. Analysts had estimated earnings of 76 cents a share on revenue of $3.53 billion. AMAT stock continued gaining this morning in pre-market trading.
The world’s leading semiconductor equipment maker said revenue for the quarter rose 44.9% to $3.55 billion, up from $2.45 billion last year, according to a company statement. AMAT’s bottom line increased to $861 million, up from $376 million, or 34 cents per share, in last year’s second quarter.
Applied Materials sells the chipmaking equipment that keeps companies like Intel Corporation (NASDAQ:INTC), Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM), Micron Technology Inc (NASDAQ:MU) and NVIDIA Corporation (NASDAQ:NVDA) going. This business tends to be a feast-or-famine type affair, with a lot of range between those two positions. When chip sales are soft or there is a glut in the market, Applied Materials’ business dries up and its growth story — as well as the stock’s momentum — go right out the window.
In management’s conference call with analysts following yesterday’s earning’s release, Gary Dickerson, president and CEO. said AMAT’s markets are growing and becoming more stable. He added that “this is a period of incredible innovation in logic, memory and display and we’re in a great position to provide the critical building blocks needed to move the industry forward.”
AMAT’s gross margin grew 3.6 points to 46.3%, operating margin increased by 8.6 points to 27.8%. The company generated $898 million in cash from operations and returned $390 million to shareholders via stock buybacks and cash dividends.
For the fiscal third quarter, Applied Materials expects adjusted earnings of 79 cents to 87 cents a share on revenue of $3.6 billion to $3.75 billion. Analysts had estimated 68 cents a share on revenue of $3.41 billion. “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,” Dickerson said in the earnings announcement.
AMAT stock has added 36% so far this year, compared to 16% for PHLX Semiconductor (INDEXNASDAQ:SOX).