Applied Materials Tops Market Estimates on High Demand for Semiconductors

By Avi Ben Ezra Friday, February 19, 2021

Applied Materials, a company that manufactures tools for producing semiconductors and chips, reported higher-than-expected business results for its Q1.

A computer circuit board.

Focus on Automotive Industry

Applied Materials says its net sales jumped by 24% to $5.16 billion to top the $4.97 billion expected from the market analysts. On an adjusted basis, the semiconductor business said it earned $1.39 per share for the quarter ending January 31, again higher than the $1.28 per share expected from analysts.

For the current quarter, the company expects to generate revenue ranging from $5.19 billion to $5.59 billion. The market analysts expected the semiconductor business to report a Q2 guidance of $4.96 billion. Similarly, earnings per share (EPS) are projected to come between $1.44 to $1.56 to easily top market estimates of $1.28 per share.

The semiconductor business also said it generated $1.42 billion in cash from operations and spent $201 million on dividends to shareholders.

“In our first fiscal quarter, we’ve seen a continued acceleration of demand in our semiconductor business as major macro and industry trends fuel increasing consumption of silicon across a wide range of markets and applications,” said Gary Dickerson, president and CEO of the company.

“We have strong momentum across the company, as our broad portfolio and exposure to technology inflections, combined with the traction of our new products, put us in a great position to substantially outgrow our markets again in 2021 and beyond.”

Given the global shortage of semiconductors, Applied Materials is exploring its options. The US lawmakers are discussing the possibility of subsidizing the construction of new chip factories.

Moreover, the company’s CEO said his company is forming a team of semiconductors experts to target specific markets within this industry, such as the automotive business.

“We think some of these markets could be some of the fastest-growing markets over the next several years,” Dickerson said.

Applied Materials stock price soared over 4% in pre-market trading Friday. Shares of the semiconductor business are up over 30% since the beginning of the year and more than 76% in the past 12 months.

Summary

Applied Materials reported Q1 earnings and revenue that topped Wall Street consensus, in addition to a better-than-expected Q2 guidance that sent company shares higher in pre-open Friday.

About the Author


Headshot of Avi Ben Ezra

Avi Ben Ezra is the CTO and Co-founder of SnatchBot and SnatchApp (Snatch Group Limited). He leads the Group’s long-term technology vision and is responsible for running all facets of the tech business which includes being the architect of the platforms and UI interfaces.

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