FINWIRES · TerminalLIVE
FINWIRES

Applied Materials Poised for Slight Quarterly Beat, Strong Outlook, RBC Says

By
Applied Materials Poised for Slight Quarterly Beat, Strong Outlook, RBC Says

Applied Materials (AMAT) is expected to post fiscal second-quarter results slightly above Wall Street's estimates and provide an upbeat third-quarter outlook amid robust dynamic random-access memory and high-bandwidth memory spending trends, RBC Capital Markets said in a note e-mailed Tuesday.

The brokerage projects the semiconductor equipment maker's second-quarter adjusted earnings at $2.64 a share on revenue of $7.65 billion, saying it expects a "slight" beat. Analysts polled by FactSet are looking for non-GAAP EPS of $2.68 and sales of $7.68 billion.

"DRAM spending trends remain strong on the back of extreme supply tightness and secular HBM demand," RBC analyst Srini Pajjuri said in a note to clients. "We expect the trend to continue through the year as clean room space availability improves and from new greenfield projects in 2027."

RBC expects Applied Materials to issue third-quarter guidance 5% to 10% ahead of consensus estimates of $2.89 for adjusted EPS and $8.1 billion in revenue. The brokerage said this would be in line with peers Lam Research (LRCX) and Tokyo Electron and better than those of ASML (ASML) and KLA (KLAC).

"(Applied Materials') management typically doesn't offer explicit (wafer fabrication equipment, or WFE) projections, but previously guided for 20% growth in its systems business in (2026), which we believe is tracking ahead," Pajjuri said.

RBC raised its price target on the Applied Materials stock to $500 from $430 while reiterating its outperform rating.

The company's shares were down 5.8% in Tuesday afternoon trade. The stock has jumped 63% so far this year.

Transition to gate all around -- a next-generation transistor architecture for smaller chips -- has been a "key driver" from the company, while Taiwan Semiconductor Manufacturing's (TSM) adoption of back-side power is projected to be a tailwind in the second half of this year, RBC said.

"Looking ahead, we expect WFE to grow at a double-digit pace for the next (two to three) years driven by (generative artificial intelligence), extreme tightness in DRAM, and growing competition in advanced foundry," Pajjuri said.

Applied Materials is scheduled to report its latest results Thursday.

Price: $419.71, Change: $-23.91, Percent Change: -5.39%

Related Articles

Japan Household Spending Falls for Fourth Month Despite Rising Wages
US Markets

Japan Household Spending Falls for Fourth Month Despite Rising Wages

Japanese households cut back on spending in March, even as wages continued to strengthen, highlighting a widening gap between income gains and consumption, according to government data released Tuesday.Average monthly consumption spending for two-or-more-person households stood at 334,701 yen, marking a 1.3% decline in nominal terms and a 2.9% drop after adjusting for inflation compared with a year earlier. The decline extended a run of contractions to a fourth consecutive month.On a seasonally adjusted monthly basis, spending fell 1.3%, compared with expectations for a modest increase, suggesting households remained cautious in the face of lingering cost pressures and weak recovery in discretionary demand.The spending weakness contrasts with a firmer income picture. Average monthly income for workers' households rose to 557,663 yen, up 6.4% in nominal terms and 4.7% in real terms from a year earlier. The data point to steady wage momentum supported by recent spring labor negotiations, where pay hikes exceeded 5% for a third straight year.Real wages, a key measure of purchasing power, increased 1% in March, extending gains for a third consecutive month. While that was slower than the revised 2% rise in February, it still marked a continuation of recovery in household earnings after a prolonged period of decline.The mix of rising wages and weak spending is likely to be closely monitored by the Bank of Japan, which is weighing whether to raise interest rates at its June policy meeting. Policymakers have emphasized that sustained wage growth alongside stable inflation is a key condition for further tightening.Nominal pay rose 2.7% to 317,254 yen, while consumer inflation used in wage calculations remained at 1.6%, staying below the central bank's 2% target for a third month. Base salaries continued to grow at a pace above 3%, though bonus payments fell after a strong prior month.

Nikkei 225
S&P 500, Nasdaq Reach New Peaks as Traders Track US-Iran Conflict
US Markets

S&P 500, Nasdaq Reach New Peaks as Traders Track US-Iran Conflict

The S&P 500 and the Nasdaq Composite hit fresh highs on Monday as traders continued to track developments in the Middle East that sent oil prices rising.The S&P 500 rose 0.2% to 7,412.8, while the Nasdaq added 0.1% to 26,274.1 -- both logging new closing highs. The Dow Jones Industrial Average climbed 0.2% to 49,704.5.Six of the 11 sectors ended in the green, led by energy, while communication services saw biggest drop.West Texas Intermediate crude was last up 3% to $98.25 a barrel, while Brent advanced 2.9% to $104.23.US President Donald Trump on Sunday rejected Iran's counteroffer to end the war, extending uncertainty around oil flows through the Strait of Hormuz.The US-Iran ceasefire is on "massive life support" and "unbelievably weak," news outlets reported Monday, citing Trump.Iran's proposal, delivered via mediator Pakistan, sought an immediate end to hostilities, the lifting of the US naval blockade of its ports and assurances against further aggression, BBC News reported, citing Iran's semi-official Tasnim news agency.Trump is scheduled to arrive in China Wednesday for a high-stakes state visit, with talks set to take place Thursday and Friday."The US will want China to use its influence with Tehran, especially because China is a major buyer of Iranian oil," Saxo Bank Chief Investment Strategist Charu Chanana said in a report Monday. "China, meanwhile, wants energy security and stable shipping lanes, but it is unlikely to appear as if it is acting under US instruction."US Treasury yields were higher, with the 10-year rate up 5.6 basis points at 4.42% and the two-year rate rising 6.7 basis points to 3.96%.Some 89% of S&P 500 companies have reported quarterly results in the latest cycle, with earnings up about 25% from a year earlier and revenue rising 10%, Oppenheimer Asset Management said in a note. Ahead of the earnings season, FactSet put expected earnings growth at 12.6% year over year."Notwithstanding the recent powerful rallies in stocks driven by earnings growth and better than expected US economic data over the past week, challenges remain to finding resolution to the conflict in the Middle East," Oppenheimer Asset Management Chief Investment Strategist John Stoltzfus said.Cisco Systems (CSCO) and Applied Materials (AMAT) are among the major names scheduled to report this week.Nvidia (NVDA) rose 2%, among the best performers on the Dow, while Qualcomm (QCOM) jumped 8.4%, among the biggest gainers on the S&P 500.Lumentum (LITE) shares surged nearly 17%, the top gainer on the S&P 500, after the company said it is set to join the Nasdaq-100 index, effective May 18.Trade Desk (TTD) shares slumped 6.8%, among the worst performers on the S&P 500, after HSBC downgraded the stock to reduce from hold while adjusting its price target to $20 from $31.Fox (FOX, FOXA) reported a surprise increase in quarterly earnings, while the media company's revenue topped estimates amid distribution growth. Fox's class A and B shares rose 7.6% and 8.1%, respectively.In economic news, US existing home sales increased less than projected in April, data from the National Association of Realtors showed."Despite mixed macroeconomic signals -- including a record-high stock market and historically low consumer confidence -- home sales were modestly boosted by the continued improvement in housing affordability," NAR Chief Economist Lawrence Yun said.Gold was last up 0.3% at $4,744.50 per troy ounce, while silver jumped 7.1% to $86.61 per ounce.

Dow JonesNasdaq CompositeS&P 500$AMAT$CSCO$FOX$FOXA$LITE$NVDA$QCOM$TTD
US Residents Prefer Sunlight Over Home Size, Redfin Survey Shows
US Markets

US Residents Prefer Sunlight Over Home Size, Redfin Survey Shows

A big chunk of US residents prefer living in smaller homes with more sunlight than in larger, dimmer units, a Redfin survey showed on Monday.Some 44% of respondents prioritize natural light over square footage, compared with 24% who prefer a larger home with less sunlight, according to the online real estate brokerage.The survey, conducted by Ipsos in March, covered 1,005 US residents.All age groups prefer sunlight over space, led by baby boomers at a 54% share for their generation, according to the survey results.Roughly 1 in 10 US residents said they would consider sunlight a "non-negotiable" feature when choosing their next home, a separate survey question showed. Some 77% identified natural light as a "very important" or "somewhat important" consideration for future homeownership, but ultimately something they might be willing to compromise on."I have buyers who walk into a home that checks every box online and walk right out after making it past the entryway because of low light," Redfin principal agent Cassia Bourne said in a statement.More than half of the natural light-seeking respondents cited improved mood and mental health as their primary motivation, Redfin said.