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Applied Materials Shares Fall After Hours as Cash Flow Declines Amid Higher Investment

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Applied Materials Shares Fall After Hours as Cash Flow Declines Amid Higher Investment

Applied Materials (AMAT) shares fell in after-hours trading Thursday after the semiconductor-equipment manufacturer reported lower free cash flow for the first nine months of the fiscal year as capital expenditures climbed sharply.

Free cash flow for the nine months ended July 26 declined to $3.58 billion from $3.66 billion a year earlier, driven by a 35% increase in capital expenditures to $1.99 billion.

Applied Materials shares fell 5% in after-hours trading. The stock has more than doubled this year.

Adjusted earnings per share increased to $3.50 during the quarter ended July 26 from $2.48 a year earlier, topping the FactSet consensus of $3.40. Revenue rose 25% to $9.12 billion, exceeding the market estimate of $9 billion.

Sales in the semiconductor-systems segment rose to $7.04 billion from $5.56 billion, while applied global services revenue increased to $1.78 billion from $1.46 billion.

"As the rapid global adoption of AI drives unprecedented demand for our materials engineering solutions, we are further raising our Semiconductor Systems revenue expectations for calendar 2026 and are confident we will grow faster than the market this year," CEO Gary Dickerson said in a statement.

RBC Capital Markets expected Applied Materials to top Wall Street's forecasts and issue fiscal fourth-quarter guidance 5% to 10% above consensus, in line with strong peer performance in semiconductor thin-film deposition and etching.

"The company's value-based pricing is another potential near-term tailwind to revenues and margins," RBC said in a report.

Applied Materials expects adjusted EPS of $4.02 a share, plus or minus $0.20, in the current quarter on revenue of $10.25 billion, plus or minus $500 million. Analysts project non-GAAP EPS of $3.71 and sales of $9.55 billion.

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