Applied Materials, Inc. ((AMAT)) has held its Q2 earnings call. Read on for the main highlights of the call.
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In a recent earnings call, Applied Materials, Inc. showcased a robust financial performance, marked by record earnings per share and significant revenue growth across all segments. Despite facing challenges in the China market and trade restrictions impacting service business growth, the company remains optimistic about its potential in advanced DRAM and service revenues.
Record Earnings Per Share
Applied Materials reported a record earnings per share of $2.39 for Q2 2025, reflecting a 14% increase year-over-year. This milestone underscores the company’s strong financial health and operational efficiency.
Revenue Growth
The company achieved total net revenue of approximately $7.1 billion, marking a 7% increase from the previous year. This growth was observed across all business segments, highlighting the company’s diversified revenue streams.
Strong Gross Margin
Applied Materials recorded a non-GAAP gross margin of 49.2%, up 170 basis points year-over-year. This represents the highest quarterly gross margin since fiscal year 2000, indicating improved cost management and operational efficiency.
Advanced DRAM Customer Growth
The company anticipates more than 40% revenue growth from advanced DRAM customers in 2025, driven by investments in DDR-5 and high-bandwidth memory technologies.
Service Revenue Growth
Core parts and services revenues grew in the low double-digit range last year, with similar growth expected in 2025. This steady increase reflects the company’s strong service offerings and customer base.
Increased Shareholder Capital Distributions
In Q2, Applied Materials distributed approximately $2 billion in dividends and share repurchases, with a 15% increase in the dividend per share, demonstrating a commitment to returning value to shareholders.
China Market Challenges
The company faces lower spending in China, with investments in both DRAM and mature logic down for the year, primarily due to trade restrictions.
200-millimeter Equipment Sales Decline
A decline in sales of 200-millimeter equipment impacted the overall revenue growth of Applied Global Services, highlighting a challenge in maintaining growth in this segment.
Trade Restrictions Impact
Trade restrictions have notably impacted service business growth, particularly in China, affecting the overall growth rate of Applied Global Services.
Forward-Looking Guidance
Looking ahead, Applied Materials provided robust guidance with an optimistic outlook. They anticipate total revenue of $7.2 billion for the third quarter, representing a 6% year-over-year increase. Non-GAAP EPS is expected to be $2.35, indicating an 11% increase year-over-year. Despite challenges, the company remains on a positive growth trajectory, supported by advancements in AI-driven technologies and strategic co-innovation initiatives.
In conclusion, Applied Materials, Inc. has demonstrated a strong financial performance with record earnings and revenue growth. While challenges persist in the China market and due to trade restrictions, the company remains optimistic about future growth, particularly in advanced DRAM and service revenues. The forward-looking guidance suggests continued strength, supported by strategic initiatives and technological advancements.