Applied Materials (AMAT) is expected to report stronger Q2 results and a better outlook amid improving demand in DRAM, HBM, advanced logic and AI-related chips, RBC Capital Markets said in a note Monday.
RBC said it expects Applied Materials to slightly beat fiscal Q2 estimates, with modeled revenue of $7.7 billion and non-GAAP earnings of $2.64 per share. For Q3, RBC analysts said they expect management's outlook to come in 5% to 10% above consensus estimates of $8.1 billion in revenue and $2.89 per share in earnings.
Applied Materials' systems business could grow by 25% or more this year, above the company's earlier view for growth of more than 20%, helped by DRAM, HBM and advanced foundry spending as DRAM demand remains strong and supply tight, RBC said.
Internet of things, communications, automotive, power, and sensors could begin to recover as analog chip demand improves, while services are expected to grow in the low single digits from the prior quarter, according to the note.
RBC kept its outperform rating and raised its price target to $500 from $430.
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