Applied Materials will release its fiscal year 2025 fourth quarter earnings after the U.S. stock market closes on November 13. The market is focusing on the support for equipment demand from AI accelerators and HBM capacity expansion, as well as the resilience of earnings guidance. According to data sourced from Tiger International APP, Applied Materials' fourth quarter revenue is forecasted to be $6.667 billion, down more than 5% year-on-year; adjusted EPS is forecasted to be $2.10, down more than 9% year-on-year.
Review of Last Quarter
Last quarter, the company achieved revenue of $7.302 billion, up 7.73% year-on-year; gross margin was 48.78%, improved year-on-year; net profit attributed to the parent company was $1.779 billion, up year-on-year but down 16.75% quarter-on-quarter; net profit margin was 24.36%, improved year-on-year; adjusted EPS was $2.48, up 16.98% year-on-year. Key points disclosed by the company included orders continuing to tilt towards AI logic and advanced storage, with the profit margin structure remaining in a high range. By segment, semiconductor systems revenue was $5.427 billion, about 74.32%; Applied Global Services revenue was $1.600 billion, about 21.91%; display and adjacent markets revenue was $263 million, about 3.60%; energy and environmental solutions revenue was $12 million, about 0.16%.
This Quarter’s Outlook
Resilience of AI-related front-end and back-end equipment demand
The continuous expansion of AI training and inference chips is reshaping the structure of equipment demand. Market viewpoints indicate that key equipment orders for advanced logic and HBM remain active, driving income and profit resilience. As leading cloud vendors continue to expand AI capital expenditures, the delivery pace of advanced process deposition, etching, and interconnect related equipment trends stably. The visibility of orders is relatively good. Last quarter, the company maintained a gross margin level of 48.78%. If this quarter's shipment structure continues to tilt towards high value-added tools, it will help approach the company's previous guidance of around 48.3% gross margin. Meanwhile, service business's deep coverage of the installed base provides incremental changes for consumables replacement and process optimization, typically possessing high margin stickiness, supporting overall profit margin this quarter.
Impact of HBM and storage capital expenditures
High-bandwidth memory penetration in AI servers continues to increase, driving demand for DRAM process and stacking related equipment. Institutional viewpoints generally believe that the company's advanced storage equipment portfolio will benefit from improved demand. Benefiting from the expansion pace and technological iteration of leading storage vendors, orders for thin film deposition, lithography, and wafer cleaning tools are transmitted to the second half of the year and next year. This trend is reflected in the company's last quarter revenue structure and profit margin performance. If storage fabs accelerate the expansion of HBM production lines this quarter, combined with the market consensus expectation for this quarter's revenue and profit, it is highly possible to maintain a net profit margin of around 24%. The risk lies in the potential impact of regional shipment approval pace and tariff uncertainties affecting the installation schedule, causing rhythm fluctuations in revenue recognition.
Stable contribution of service business and cash flow resilience
Applied Global Services business revenue last quarter was about $1.600 billion, reflecting the stable contribution of maintaining, upgrading, and process improvement of existing equipment, hedging the capital expenditure cycle fluctuations. Service contracts are typically locked in multi-year formats, bringing relatively stable cash flow and gross margin performance. Combining market forecasts for EPS and EBIT down revision, the stability of the service business helps buffer the disturbances caused by short-term shipment structure adjustments to profit side. If hardware delivery shows slight delays this quarter, service and upgrades will provide some bottom support for profit margin and EPS, which is one of the core logics for market confidence in the company's profitability quality.
Analyst Perspectives
Recent institutional views are predominantly bullish, with the proportion higher than bearish. Multiple institutions emphasize the company's advanced tools for AI and HBM production lines maintaining advantages in the mid to short term and believe the income and profit structure remains resilient. Regarding the earnings release schedule, Morgan Stanley maintains a "hold" view and suggests fourth quarter revenue guidance may be in the low single-digit growth range, considering demand from TSMC and DRAM as the main growth drivers; Goldman Sachs gives a "buy" rating and emphasizes the benefit logic of transitioning to 3D architecture; UBS maintains a "neutral" rating and raises the target price, stating this quarter's performance may be slightly better than expected. Among these viewpoints, the proportion of bullish positions is higher, with core arguments focused on equipment demand for advanced logic and HBM expansion, robust gross margin structure, and stable cash flow from the service business. Institutions generally pay attention to whether the company's guidance on revenue and profit can verify order visibility. If guidance aligns with or slightly exceeds market consensus expectations, views suggest the company's relative advantage in the equipment cycle is likely to continue.
This content is generated based on Tiger AI data and is for reference only.