Market Overview - Asian markets are experiencing declines, influenced by significant losses in technology stocks on Wall Street due to investor concerns about potential disruptions from artificial intelligence [1][4] - U.S. futures are also lower, with the S&P 500 and Dow Jones Industrial Average both down by 0.2% [2] Stock Performance - Tokyo's Nikkei 225 decreased by 1.2% to 56,941.97, with SoftBank Group, focused on AI, dropping 8.9% despite reporting a quarterly profit of $1.6 billion [2] - South Korea's Kospi fell 0.3% to 5,507.01, while Samsung Electronics rose 1.5% [2] - Hong Kong's Hang Seng index declined by 1.7% to 26,575.84, and the Shanghai Composite index was down 1% to 4,091.65 [3] - In Australia, the S&P/ASX 200 traded 1.4% lower at 8,917.60 [3] Wall Street Performance - Wall Street experienced sharp losses, with the S&P 500 dropping 1.6% to 6,832.76, marking its second-worst day since Thanksgiving [4] - The Dow Jones Industrial Average fell 1.3% to 49,451.98, and the Nasdaq composite lost 2% to 22,597.15 [4] Company-Specific News - Cisco Systems saw a significant decline of 12.3% despite reporting better-than-expected quarterly results, raising concerns about ongoing profitability [5] - AppLovin's shares plunged 19.7% despite also reporting better-than-expected quarterly profits, as fears over AI's impact weighed on its stock [5] Analyst Perspectives - Some analysts express concerns about the uncertainties surrounding AI disruptions, particularly affecting investor confidence in software stocks [6] - Conversely, economists at Capital Economics remain optimistic about the AI sector, predicting a good year for the S&P 500 driven by technology-led gains [7] - Thomas Mathews from Capital Economics noted that a significant reversal in tech performance would require a substantial decline in the tech sector itself [7] Economic Indicators - Investors are closely monitoring upcoming U.S. inflation data, which could influence the Federal Reserve's interest rate decisions, with expectations of low likelihood for another rate cut in the near term [8] - In commodity markets, U.S. benchmark crude oil prices fell slightly, while gold and silver prices saw gains [9]

Market Overview - Asian shares mostly traded lower, influenced by significant losses on Wall Street due to concerns over technology stocks affected by artificial intelligence disruptions [1] - The S&P 500 experienced its second-worst day since Thanksgiving, dropping 1.6% to 6,832.76, while the Dow Jones Industrial Average fell 1.3% to 49,451.98, and the Nasdaq composite lost 2% to 22,597.15 [4] Regional Indices Performance - Tokyo's Nikkei 225 decreased by 0.8% to 57,165.13, with SoftBank Group, focused on AI, falling 6.8% despite reporting quarterly profits [2] - South Korea's Kospi rose 0.4% to 5,545.49, driven by gains in technology stocks, particularly Samsung Electronics, which increased by 1.2% [2] - Hong Kong's Hang Seng dropped 1.8% to 26,547.97, and the Shanghai Composite index fell 0.7% to 4,105.04 [3] - Australia's S&P/ASX 200 traded 1.4% lower at 8,919.30 [3] Company-Specific Developments - Cisco Systems' shares plummeted 12.3% despite better-than-expected quarterly results, raising concerns about ongoing profitability [5] - AppLovin's stock fell 19.7% even after reporting better-than-expected quarterly profits, as fears over AI's impact on its business weighed heavily [5] Analyst Sentiment - Some analysts express concerns about the uncertainties surrounding AI disruptions, suggesting that these risks may persist for some time [6] - Conversely, economists at Capital Economics remain optimistic about the AI rally, predicting a "good year" for the S&P 500, supported by technology-led gains [7] - Thomas Mathews from Capital Economics believes that a significant decline in tech performance would be necessary for a sustained reversal of tech outperformance, indicating confidence in the tech sector's future [8]

12 February 2026 | 11:41PM KST Equity Research APAC Tech: Semiconductors Memory: Kioxia CY4Q25 read-across; strong implied ASP guidance supports our positive outlook for On February 12, Japanese NAND producer Kioxia (covered by Shuhei Nakamura) reported its CY4Q25 (FY3Q25 or December quarter) earnings, and we provide read-across to our covered Korean memory suppliers, SK Hynix (Hynix, Buy) and Samsung Electronics (SEC, Buy). Key takeaways include: 1) Strong implied guidance on CY1Q26 ASP growth, 2) Unchange ...

Financial Data and Key Metrics Changes - Revenue for Q1 2026 was $7 billion, down 2% year-over-year, but within the upper end of guidance range [17] - Non-GAAP gross margin increased by 20 basis points year-over-year to 49.1% [17] - Non-GAAP operating profit declined 4% year-over-year to $2.1 billion, with non-GAAP earnings per share of $2.38, flat year-over-year [17] Business Line Data and Key Metrics Changes - Semiconductor Systems revenue was $5.14 billion, down 8% year-over-year, but included record DRAM revenue [19] - Applied Global Services (AGS) delivered record revenue of $1.56 billion, growing 15% year-over-year [19] - Non-GAAP gross margin for AGS increased by 210 basis points, and non-GAAP operating margin grew by 320 basis points [19] Market Data and Key Metrics Changes - Revenue in China declined 7% year-over-year, representing 27% of combined Semi Equipment and AGS sales [17] - The global semiconductor industry revenues are projected to reach $1 trillion in 2026, driven by AI computing [5][14] - Demand for high-bandwidth memory (HBM) DRAM is increasing, with larger die sizes requiring significantly more wafer starts [7] Company Strategy and Development Direction - The company is focusing on inflection-focused innovation to drive sustainable growth and margin expansion [9][14] - Investments in AI infrastructure are expected to accelerate demand for semiconductor manufacturing capacity [4][5] - The company plans to launch over a dozen new products in 2026, enhancing its leadership in advanced logic and DRAM [10] Management's Comments on Operating Environment and Future Outlook - Management expects strong growth momentum to continue into 2027, driven by AI adoption and semiconductor demand [6][15] - The company anticipates Semiconductor Systems revenue of around $5.8 billion for Q2 2026, with a non-GAAP EPS of $2.64 [22] - Management highlighted the importance of clean room capacity and customer visibility in driving future growth [15][50] Other Important Information - The company has nearly doubled its system manufacturing capacity over the past several years to meet increasing demand [16] - A significant investment of $500 million in inventory year-over-year has been made to support growth [16] - The company has distributed over 85% of free cash flow to shareholders in the past year [21] Q&A Session Summary Question: Guidance on WFE for 2026 - Management expects to grow the semiconductor equipment business more than 20% in 2026, driven by AI [26][27] Question: Gross Margin Outlook - Management indicated that gross margins have improved significantly and are expected to continue growing due to high-value product offerings [32][35] Question: Changes in China and ICAPS Market - Management noted that the ICAPS market is now expected to be flat, with long-term growth projected in mid- to high-single digits [40] Question: Advanced Packaging Growth - Advanced packaging WFE spending is increasing, particularly in HBM and 3D chiplet stacking, where the company holds a strong market position [41][42] Question: Growth Rate for Foundry Logic and DRAM - Management refrained from ranking growth rates between foundry logic and DRAM due to factory availability constraints but indicated both are in high-growth segments [91][92]

First Quarter Fiscal 2026 Earnings Presentation Applied Materials External Forward-Looking Statements This presentation contains forward-looking statements, including those regarding anticipated growth and trends in our businesses and markets, industry outlooks and demand drivers, technology transitions, our business and financial performance and market share positions, our capital allocation and cash deployment strategies, our investment and growth strategies, our development of new products and technologi ...

Core Insights - Applied Materials reported strong first-quarter results, driven by increased industry investments in AI computing and semiconductor technologies [4][7][9] Financial Performance - Revenue for Q1 FY2026 was $7.01 billion, a decrease of 2% compared to Q1 FY2025's $7.17 billion [5][7] - GAAP gross margin was 49.0%, while non-GAAP gross margin was 49.1%, showing slight improvements year-over-year [5][7] - Operating income on a GAAP basis was $1.83 billion (26.1% of net revenue), and on a non-GAAP basis, it was $2.11 billion (30.0% of net revenue) [2][5] - Net income increased by 71% to $2.03 billion, with diluted earnings per share (EPS) rising 75% to $2.54 [5][7] Cash Flow and Shareholder Returns - The company generated $1.69 billion in cash from operations and returned $702 million to shareholders through share repurchases and dividends [3][5] - Non-GAAP free cash flow for the quarter was $1.04 billion, a 91% increase from $544 million in the previous year [5][34] Business Outlook - For Q2 FY2026, Applied expects total revenue of approximately $7.65 billion, with non-GAAP diluted EPS projected at $2.64 [9] - The semiconductor equipment business is anticipated to grow over 20% in the calendar year, driven by demand for advanced technologies [4][9] Segment Performance - Semiconductor Systems revenue was $5.14 billion, down from $5.60 billion in the previous year, with a gross margin of 54.3% [11][12] - Applied Global Services reported revenue of $1.56 billion, up from $1.35 billion, with a gross margin of 34.4% [13][12] Recent Developments - Samsung Electronics will join Applied's new EPIC Center in Silicon Valley, aimed at accelerating the commercialization of breakthrough technologies [6][12] - The company introduced new systems to enhance the performance of next-generation transistors, receiving awards for technology development and sustainability [12][19]

Market and Performance Overview - Emerging markets advanced 4.7% in Q4 2025, finishing as one of the best-performing global equity asset classes, with the MSCI Emerging Markets Index rising 33.6% for the year, outperforming the MSCI EAFE Index (+31.2%) and the U.S. S&P 500 Index (+17.9%) [2] - Performance in Q4 was led by Korea and Taiwan, with Korean equities soaring 27.3% driven by a 50% gain in the IT sector, while Taiwanese stocks climbed 10.4% due to AI-related momentum [3] Sector Performance - The IT sector gained 16.4%, bolstered by AI-related stocks, while the materials sector advanced 11.6% as gold prices rose over 10% and copper prices hit record highs [6] - Energy, financials, and industrials sectors outperformed the index, while consumer discretionary, communication services, health care, and real estate underperformed [6] Company Highlights - SK Hynix saw its shares soar over 80% in Q4 and nearly tripled for the year due to increased demand for DRAM and NAND memory, particularly for AI workloads [7] - Samsung Electronics also experienced strong performance, benefiting from memory shortages that enhanced pricing power [7] - Taiwan Semiconductor, a leading manufacturer of high-end chips for Nvidia, significantly outperformed the benchmark [7] Regional Contributions - Significant contributors included China's Sieyuan Electric and Korea's HD Hyundai Electric, supporting AI data center buildouts [10] - Capitec Bank in South Africa delivered strong financial results, while Titan, an Indian jewelry retailer, showed encouraging performance despite India's overall underperformance [10] Detractors - Alibaba and Tencent surrendered gains due to a broader rotation out of China, while Contemporary Amperex Technology also faced declines [11] - MercadoLibre remained weak amid competition concerns in Brazil, and Apollo Hospitals detracted due to its large portfolio weight in a lagging Indian market [12] Portfolio Positioning - The strategy added four new positions, including Raia Drogasil and Nu Holdings in Brazil, while exiting positions in B3 S.A. and Proya Cosmetics [13][14][17] - Upgraded exposure in Indonesia by replacing PT Bank Rakyat Indonesia with PT Bank Central Asia, which has a strong deposit franchise [15] Outlook - The emerging market recovery is viewed as being in its early stages, with appealing valuations and supportive macroeconomic drivers [18] - Anticipated increased foreign investments into EM equities, driven by lower valuations and stronger economic growth [19] - The Chinese economy shows signs of increased stability, with improved trade relations and a more optimistic outlook [20] - Emerging markets offer opportunities in world-class companies with technological innovation, particularly in sectors like industrial automation, e-commerce, and fintech [21] - India remains a focus due to its large population and status as the fastest-growing major global economy, despite challenges faced in 2025 [22] Portfolio Highlights - The ClearBridge Emerging Market Strategy outperformed its benchmark in Q4, with gains across five of the nine sectors invested [23] - Stock selection in IT and industrials sectors contributed positively, while communication services and an underweight in materials detracted from performance [24] - Leading contributors included SK Hynix, Samsung Electronics, and Capitec Bank, while Tencent, Alibaba, and MercadoLibre were primary detractors [25]

Market Overview - U.S. stock futures are showing modest gains, with Dow Jones futures up approximately 0.3% to 0.4%, S&P 500 futures climbing around 0.3%, and Nasdaq Composite futures advancing by about 0.2% to 0.3% [2] - Major U.S. indexes ended largely flat or slightly lower, with the S&P 500 down less than 0.1%, Dow Jones dipping 0.1% to 50,121.40 points, and Nasdaq declining 0.2% to 23,066.47 points [3] Economic Data - A robust U.S. Labor Department report indicated that employers added 130,000 jobs in January, significantly exceeding forecasts, which tempered expectations for near-term Federal Reserve interest rate cuts [3] - Upcoming economic data includes initial jobless claims and existing home sales, which will provide insights into the U.S. labor market and housing sector [4] - The most anticipated economic event is Friday's Consumer Price Index (CPI) inflation report for January, which could influence Federal Reserve policy decisions [5] Corporate News - Cisco Systems (CSCO) shares fell approximately 7% to 8% due to weak quarterly guidance and lower gross margins, impacting the broader technology sector [6] - McDonald's (MCD) shares slipped slightly despite beating earnings estimates, indicating investor concerns about other aspects of its report [7] - Robinhood Markets (HOOD) experienced an 8.8% drop after revenue fell short of forecasts and concerns about its 2026 expense outlook [7] - Moderna (MRNA) saw its stock fall 3.5% after the FDA refused to review its application for a new flu vaccine [8] - Kraft Heinz (KHC) shares rose 0.4% after announcing a pause in plans to split the company and revealing a $600 million investment [8] - Unity (U) plunged over 25% in premarket trading despite strong fourth-quarter results due to disappointing first-quarter revenue guidance [9] - Micron Technology (MU) stock soared nearly 10%, leading a rally in semiconductor stocks globally [10] - Other notable premarket movers include Equinix (EQIX) gaining 8.64% and Sandisk (SNDK) up 6.07%, while Rollins (ROL) dropped 12.50% and Paycom Software (PAYC) fell 8.22% [11] International Market Movements - Siemens AG (SIEGY) rallied over 6% after boosting its 2026 outlook, while EssilorLuxottica SA (ESLOY) surged 10% on strong demand for AI-powered glasses [12] - Schroders Plc (SDR.L) jumped 30% on news of its acquisition by U.S. peer Nuveen [12] Sector Performance - Among the "Magnificent Seven" tech stocks, Nvidia (NVDA) and Tesla (TSLA) posted modest gains, while Alphabet (GOOGL) declined 2.4% [13] - Energy sector stocks saw gains, with Exxon Mobil (XOM) rising 2.6% and Smurfit Westrock (SMFT) surging 9.9% [13] Market Sentiment - The market remains focused on the interplay between economic data, corporate performance, and the Federal Reserve's potential path for interest rates, with trading likely influenced by ongoing assessments of these factors [14]

Market Overview - Asian stocks ended mixed, with a stronger-than-expected U.S. jobs report boosting optimism but dampening hopes for Federal Reserve rate cuts in the near term [1] - Precious metals, including gold, saw a decline, with gold falling by 0.5% to trade below $5,060 an ounce due to a strengthening U.S. dollar [1] - Oil prices experienced slight increases amid ongoing tensions between the United States and Iran [1] Regional Indices - China's Shanghai Composite index rose marginally to 4,134.02, influenced by reports of a potential extension of the U.S.-China trade truce [2] - Hong Kong's Hang Seng index fell by 0.86% to 27,032.54, negatively impacted by stock performance [2] - Japan's Nikkei average finished slightly lower at 57,639.84 after a volatile session, while the broader Topix index increased by 0.70% to 3,882.16 [3] - Seoul's Kospi index closed 3.13% higher at 5,522.27, driven by significant gains in technology shares, particularly Samsung Electronics, which surged by 6.4% [5] - Australia's S&P/ASX 200 rose by 0.32% to 9,043.50, supported by strong earnings from ANZ Group, which saw an 8.5% increase in its shares [5] - New Zealand's S&P/NZX-50 index edged up by 0.18% to 13,531.48, with Skellerup Holdings gaining 1.8% after reporting record half-year earnings [6] Company Performance - Shiseido's shares soared nearly 16% following fourth-quarter earnings and a full-year forecast that exceeded analyst expectations [4] - Honda Motor's stock fell by 3.5% after reporting a significant decline in third-quarter operating profit [4] - SoftBank Group's shares increased by 2.4% prior to announcing its financial results [4]

It's 9 am in Shanghai, Shenzhen, and here in Hong Kong, you're watching the China show. I'm Annabelle Droulers with David Ingles. Good morning.We are counting down to the open of markets in greater China. Our top stories today, Asian stocks rising, treasuries sliding as traders trimming bets for a Fed rate cuts following a stronger than expected US jobs report. So the so-called scare trade spreads to this region with real estate services, biotech stocks, tracking declines among peers on Wall Street.Meanwhil ...