Core Viewpoint - Applied Materials Inc. (AMAT) reported mixed financial results for the second quarter of fiscal 2025, with earnings exceeding estimates but revenues falling slightly short of expectations [1][3]. Financial Performance - Non-GAAP earnings per share for Q2 fiscal 2025 were $2.39, beating the Zacks Consensus Estimate by 3.5% and up from $2.09 a year ago [1]. - Revenues for the quarter were $7.1 billion, missing the Zacks Consensus Estimate by 0.28%, but showing an increase from $6.65 billion in the same quarter last year [1]. Segment Performance - Semiconductor Systems generated $5.26 billion in revenues, accounting for 74.1% of total revenues, reflecting a 7.2% increase year-over-year, but missing the consensus estimate of $5.3 billion [3]. - Applied Global Services reported revenues of $1.57 billion, representing 22.1% of net revenues, up 2.4% from the prior year and surpassing the consensus estimate of $1.547 billion [3]. - Revenues from Display and Adjacent Markets were $259 million, up 44.7% year-over-year, exceeding the consensus estimate of $250.2 million [4]. Geographic Revenue Breakdown - Revenue contributions by geography included: - United States: $808 million (11%) - Europe: $252 million (4%) - Japan: $572 million (8%) - Korea: $1.56 billion (22%) - Taiwan: $1.997 billion (28%) - Southeast Asia: $135 million (2%) - China: $1.774 billion (25%) [5]. - Notable year-over-year revenue changes included increases in Japan (26.3%), Korea (58.1%), and Taiwan (96%), while the U.S. and Southeast Asia saw declines of 5.3% and 36.6%, respectively [6]. Operating Results - Non-GAAP gross margin was 49.2%, expanding by 170 basis points from the previous year [7]. - Operating expenses were $1.31 billion, up 6.3% year-over-year, but as a percentage of sales, it contracted by 10 basis points to 18.5% [7]. - Non-GAAP operating margin improved to 30.7%, an increase of 170 basis points year-over-year [7]. Balance Sheet & Cash Flow - As of April 27, 2025, cash and short-term investments totaled $6.75 billion, down from $8.02 billion at the end of January 2025 [8]. - Inventories increased to $5.66 billion from $5.5 billion in the previous quarter, while accounts receivable rose to $6.19 billion from $5.9 billion [8]. - Free cash flow generated was $1.06 billion, up from $544 million in the prior quarter [9]. Shareholder Returns - AMAT returned $2.00 billion to shareholders, including $1.67 billion in share repurchases and $325 million in dividends [10]. Guidance - For the fiscal third quarter, AMAT expects net sales of $7.2 billion (+/- $500 million), with a consensus estimate of $7.21 billion [11]. - Projected sales for Semiconductor Systems, AGS, and Display are $5.40 billion, $1.55 billion, and $250 million, respectively [11]. - Expected non-GAAP gross margin is 48.3%, with operating expenses projected at $1.34 billion [11]. - Management anticipates non-GAAP earnings per share of $2.35 (+/- $0.20), compared to a consensus estimate of $2.32 [12].

Core Insights - Applied Materials reported revenue of $7.1 billion for the quarter ended April 2025, reflecting a year-over-year increase of 6.8% [1] - The earnings per share (EPS) for the quarter was $2.39, up from $2.09 in the same quarter last year, surpassing the consensus estimate of $2.31 by 3.46% [1] - The revenue fell slightly short of the Zacks Consensus Estimate of $7.12 billion, resulting in a surprise of -0.28% [1] Financial Performance Metrics - Net Sales for Applied Global Services reached $1.57 billion, exceeding the average estimate of $1.55 billion, marking a year-over-year increase of 2.4% [4] - Net Sales for Semiconductor Systems were reported at $5.26 billion, slightly below the average estimate of $5.30 billion, with a year-over-year growth of 7.2% [4] - Net Sales for Display and Adjacent Markets amounted to $259 million, surpassing the estimated $250.23 million, showing a significant year-over-year increase of 44.7% [4] - Net Sales for Corporate and Other were reported at $20 million, below the estimated $20.86 million, reflecting a year-over-year decline of 44.4% [4] Stock Performance - Shares of Applied Materials have returned +26% over the past month, outperforming the Zacks S&P 500 composite's +9% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]