Financial Data and Key Metrics Changes - Applied Materials achieved record annual revenue of $28.4 billion in fiscal 2025, representing a 4% increase compared to fiscal 2024 [16][18] - Non-GAAP gross margin improved by 120 basis points to 48.8%, the highest level in 25 years [17] - Non-GAAP earnings per share increased by 9% [17] Business Line Data and Key Metrics Changes - Semiconductor systems revenue grew by 4%, despite trade restrictions impacting access to the Chinese market [16] - Applied Global Services (AGS) revenue reached a record $6.4 billion, growing by 3% [16] - Display revenue surged by 20% [17] Market Data and Key Metrics Changes - Revenue from China declined to 29% of total company revenue, down from a peak of 45% in Q1 fiscal 2024 [19] - DRAM spending is expected to be flat for calendar 2025, while leading-edge foundry logic and NAND are projected to grow significantly [5][6] Company Strategy and Development Direction - The company is focusing on inflection-focused innovation to maintain leadership in high-growth areas such as leading-edge logic, DRAM, and advanced packaging [9][12] - Construction of the EPIC Center in Silicon Valley is on track, aimed at enhancing collaborative semiconductor equipment and process innovation [18] - The company is adapting its workforce and operations to meet anticipated demand increases in the second half of calendar 2026 [15][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the semiconductor industry's growth, driven by AI computing, with expectations of a compound annual growth rate of 10%-15% over the next five years [8] - The company anticipates wafer fab equipment spending to accelerate in the second half of calendar 2026 [23] - Management noted that trade restrictions have reduced the accessible market in China, but they are maintaining market share in areas where they can compete [5][32] Other Important Information - The company is shifting its reporting structure to improve operational efficiency and visibility into its semiconductor and services businesses [20] - The company generated nearly $8 billion in cash from operations and distributed approximately $6.3 billion to shareholders [18] Q&A Session Summary Question: How have conversations with clients evolved regarding AI infrastructure spending? - Management noted that AI is the primary focus for customers, driving demand for wafer fab equipment in segments like leading-edge foundry logic and DRAM [24][25] Question: What are the implications of the headcount reduction on gross margins and operating expenses? - Management indicated that the reduction was part of a broader strategy to increase productivity and that they expect to add back necessary skills as demand ramps up [27][28] Question: How is the competitive landscape changing with increasing domestic competition in China? - Management acknowledged that while they have lost share due to trade restrictions, they are performing well in segments where they can compete [31][32] Question: What is the expected growth trajectory for the first half of fiscal 2026? - Management expects the semiconductor business to remain flat until significant growth begins in the second half of the year [42] Question: How does the company plan to address the impact of trade restrictions on its business? - Management stated that they do not anticipate significant new restrictions and believe they can maintain share in the markets where they can compete [32][56]

Financial Data and Key Metrics Changes - Applied Materials reported record annual revenue of $28.4 billion for fiscal 2025, representing a 4% increase year-over-year [16][18] - Non-GAAP gross margin increased by 120 basis points to 48.8%, the highest level in 25 years [17] - Non-GAAP earnings per share rose by 9% [18] - Free cash flow was $5.7 billion, with capital spending of $2.3 billion [18] Business Line Data and Key Metrics Changes - Semiconductor systems revenue grew by 4%, despite trade restrictions impacting access to the Chinese market [16] - Applied Global Services (AGS) revenue increased by 3% to a record $6.4 billion, with recurring revenue from parts, services, and software growing by double digits [17] - Display revenue surged by 20% [17] Market Data and Key Metrics Changes - Revenue from China declined to 29% of total company revenue, down from a peak of 45% in Q1 fiscal 2024 [19] - DRAM revenue from leading-edge customers grew by over 50% over the past four fiscal quarters [6][16] - NAND investment is expected to double in 2025, although it remains a small portion of the wafer fab equipment market [5] Company Strategy and Development Direction - The company is focusing on an inflection-focused innovation strategy to extend leadership in high-growth areas such as leading-edge logic, DRAM, and advanced packaging [9][12] - The construction of the EPIC Center in Silicon Valley is on track to open next year, aimed at enhancing collaborative semiconductor equipment and process innovation [18] - The company is preparing for increased demand in the second half of calendar 2026, aligning supply chain and manufacturing to meet customer needs [15][16] Management's Comments on Operating Environment and Future Outlook - Management anticipates that AI computing will drive substantial investment in semiconductor infrastructure, with the semiconductor industry expected to grow at a compound annual rate of 10-15% over the next five years [8] - The company expects wafer fab equipment spending in China to be lower in 2026, with no significant changes to market restrictions anticipated [5] - Management expressed confidence in maintaining market share and competing effectively in areas where they can operate [5][33] Other Important Information - The company announced changes in reporting segments to improve operational efficiency and visibility into semiconductor and services businesses [20] - The company is adopting AI and digital tools to enhance productivity and streamline operations [13] Q&A Session Summary Question: How have conversations with clients evolved regarding AI infrastructure spending? - Management noted that AI is the primary focus for customers, driving demand for segments like leading-edge foundry logic and DRAM, where Applied has strong positions [24][25] Question: What are the implications of the headcount reduction on gross margins and operating expenses? - Management indicated that the reduction was part of a broader strategy to increase productivity and that they expect to add back necessary skills in the future [27][28] Question: How is the company positioned against increasing competition from domestic Chinese firms? - Management expressed confidence in their strong positions in leading-edge foundry logic and DRAM, despite increased competition [31][33] Question: What is the expected growth trajectory for the first half of fiscal 2026? - Management expects the semiconductor business to remain flat until significant growth begins in the second half of the year [42] Question: How does the company view the impact of trade restrictions on its market share in China? - Management acknowledged losing share due to increased restrictions but emphasized strong performance in segments where they can compete [55][56]

Core Viewpoint - Applied Materials' stock price continued to decline in after-hours trading, dropping by 4.5% [1] Group 1 - The decline in stock price indicates ongoing market challenges for Applied Materials [1]

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BREAKING: Stock Market Ends Wild Week Narrowly Mixed Chip-gear supplier Applied Materials (AMAT) late Thursday modestly beat Wall Street's targets for its fiscal fourth quarter and guided slightly higher than views for the current period. But AMAT stock fell in extended trading amid declining sales and earnings. Follow Patrick Seitz on X at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks. YOU MAY ALSO LIKE: The Santa Clara, Calif.-based company earned an adjusted $2.1 ...

Financial Performance - Fiscal Year 2025 revenue reached a record $28.4 billion, a 4% year-over-year increase[8] - Non-GAAP earnings per share (EPS) for Fiscal Year 2025 were $9.42, a 9% year-over-year increase[8] - Non-GAAP gross margin for Fiscal Year 2025 was 48.8%, a 120 basis points increase year-over-year[8] - Applied Global Services (AGS) achieved record revenue, growing 3% year-over-year to $6.4 billion[12] - Semiconductor Systems Group revenue was $20.8 billion, a 4% year-over-year increase[12] Future Outlook - The company anticipates first quarter fiscal year 2026 revenue of approximately $6.85 billion, plus or minus $500 million[49] - The company anticipates first quarter fiscal year 2026 non-GAAP EPS of approximately $2.18, plus or minus $0.20[49] Capital Allocation - The company is committed to distributing 80-100% of free cash flow (FCF) to shareholders over time[40, 53] - As of the end of Fiscal Quarter 4 2025, $14.0 billion remained on the share repurchase authorization[40, 53]

Core Insights - Applied Materials reported fourth-quarter sales of $6.8 billion, exceeding analyst expectations of $6.67 billion [2] Financial Performance - Fourth-quarter sales reached $6.8 billion, which is higher than the anticipated $6.67 billion by analysts [2]

Core Viewpoint - Applied Materials anticipates a decline in spending on chipmaking equipment in China by 2026 due to stricter U.S. export controls, although overall revenue is expected to be stronger in the latter half of the year [1] Group 1: Revenue Impact - The company projects a $600 million reduction in fiscal 2026 revenue as a result of expanded U.S. export restrictions affecting shipments to China-based customers [2] - Current-quarter revenue is forecasted at $6.85 billion, with a variance of $500 million, compared to analysts' expectations of $6.76 billion [3] - The suspension of the affiliate rule is expected to enable approximately $600 million in sales for the full fiscal year [4] Group 2: Market Dynamics - Applied Materials' share of sales in China has decreased from nearly 40% to the mid-20% range, with foreign competitors still able to sell to Chinese companies [5] - The company can no longer supply China's memory chip and older-generation chipmaking markets due to tighter U.S. controls, but does not foresee major new shipment restrictions [4] Group 3: Future Outlook - Customers indicate that spending on wafer fab equipment is likely to accelerate starting in the second half of calendar 2026 [6] - The company forecasts a profit per share of $2.18, excluding one-off items, which is higher than the estimated $2.13 [6]

Core Viewpoint - U.S.-based Applied Materials forecasts strong first-quarter revenue, driven by robust demand for semiconductor manufacturing equipment, particularly for AI chip production [1] Company Summary - Applied Materials is a leading manufacturer of semiconductor manufacturing equipment, indicating a positive outlook for the upcoming quarter [1] - The company’s revenue forecast reflects the increasing demand for tools essential in the production of AI chips, highlighting a significant growth area within the semiconductor industry [1] Industry Summary - The semiconductor industry is experiencing heightened demand due to the rise of AI technologies, which is expected to continue influencing equipment manufacturers positively [1] - The forecasted revenue growth for Applied Materials suggests a broader trend of investment and expansion within the semiconductor sector, particularly in AI-related applications [1]

Revenue Performance - Record annual revenue of $28.37 billion, up 4% year over year[4] - Quarterly revenue of $6.80 billion, down 3% year over year[4] - Display segment revenue for FY2025 at $1.06 billion, up from $885 million in FY2024[7] - Revenue from China accounted for 29% of total revenue in Q4 FY2025, slightly down from 30% in Q4 FY2024[17] Earnings and Profitability - Record annual GAAP EPS of $8.66, up 1% year over year, and record non-GAAP EPS of $9.42, up 9% year over year[4] - The company reported a diluted earnings per share of $2.38 for Q4 FY2025, compared to $2.09 in Q4 FY2024, reflecting a growth of 13.88%[13] - Non-GAAP earnings per diluted share for the three months ended October 26, 2025, was $2.17, compared to $2.32 in the prior year, a decrease of 6.5%[24] - GAAP reported net income for the three months ended October 26, 2025, was $1,897 million, an increase of 9.6% from $1,731 million in the same period last year[19] - Net income for FY2025 was $6,998 million, a decrease of 2.49% from $7,177 million in FY2024[13] Margins - Operating margin for Q4 FY2025 at 25.2%, down from 29.0% in Q4 FY2024[5] - Non-GAAP operating margin for FY2025 at 30.2%, up from 29.2% in FY2024[5] - Non-GAAP operating margin for Semiconductor Systems was 32.3% for the three months ended October 26, 2025, compared to 35.4% in the prior year[26] - Non-GAAP gross margin improved to 48.1% for the three months ended October 26, 2025, compared to 47.5% in the prior year[19] Expenses and Investments - Research, development, and engineering expenses increased to $917 million in Q4 FY2025 from $858 million in Q4 FY2024, representing a 6.87% increase[13] - Capital expenditures for FY2025 were $2,260 million, significantly higher than $1,190 million in FY2024, indicating increased investment in growth[16] - Restructuring charges of $181 million were recorded for the three months ended October 26, 2025, related to a workforce reduction plan[20] Cash Flow and Assets - Cash provided by operating activities for FY2025 was $7,958 million, down from $8,677 million in FY2024[16] - Cash provided by operating activities for the three months ended October 26, 2025, was $2,828 million, compared to $2,575 million in the same period last year, an increase of 9.8%[31] - Non-GAAP free cash flow for the twelve months ended October 26, 2025, was $5,698 million, down from $7,487 million in 2024, a decrease of 23.9%[31] - Total assets increased to $36,299 million in FY2025 from $34,409 million in FY2024, marking a growth of 5.49%[15] - Total stockholders' equity rose to $20,415 million in FY2025, compared to $19,001 million in FY2024, an increase of 7.43%[15] Future Outlook - Company is preparing for higher demand starting in the second half of calendar 2026, focusing on R&D for faster and more energy-efficient technologies[3] Tax and Valuation - The company recognized a $403 million valuation allowance against deferred tax assets related to corporate alternative minimum tax credits in the third quarter of fiscal 2025[22]