Applied Materials’ third quarter results were shaped by steady demand for semiconductor manufacturing equipment, despite a year-over-year sales decline. Management pointed to ongoing trade restrictions and a less favorable market mix as factors that tempered growth, especially given reduced access to the Chinese market. CEO Gary Dickerson emphasized that, while the company’s accessible market shrank due to these restrictions, Applied Materials maintained share where it could compete. He attributed continued strength to leadership in process technologies for DRAM and advanced foundry logic, stating, “We have very high share…across multiple technology nodes.”
Is now the time to buy AMAT? Find out in our full research report (it’s free for active Edge members).
Applied Materials (AMAT) Q3 CY2025 Highlights:
- Revenue: $6.8 billion vs analyst estimates of $6.65 billion (3.5% year-on-year decline, 2.2% beat)
- Adjusted EPS: $2.17 vs analyst estimates of $2.10 (3.3% beat)
- Adjusted EBITDA: $2.06 billion vs analyst estimates of $2.02 billion (30.3% margin, 2.2% beat)
- Revenue Guidance for Q4 CY2025 is $6.85 billion at the midpoint, roughly in line with what analysts were expecting
- Adjusted EPS guidance for Q4 CY2025 is $2.18 at the midpoint, above analyst estimates of $2.15
- Operating Margin: 25.2%, down from 29% in the same quarter last year
- Inventory Days Outstanding: 152, up from 141 in the previous quarter
- Market Capitalization: $187.3 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Applied Materials’s Q3 Earnings Call
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C.J. Muse (Cantor Fitzgerald) asked about visibility into AI-driven demand. CEO Gary Dickerson replied that customer engagement has deepened and customers are providing more than one year’s demand visibility, allowing Applied Materials to prepare its supply chain for anticipated ramps.
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Sreekrishnan Sankarnarayanan (TD Cowen) pressed on competitive pressures in core products and China. Dickerson explained that outside restricted segments, Applied Materials is holding or gaining share, and is optimistic about new product launches for both China and global markets.
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Stacy Rasgon (Bernstein Research) questioned the timing and impact of the anticipated second-half demand lift. CFO Brice Hill stated that semiconductor systems revenue is expected to remain flat until the second half, when leading-edge investments are projected to drive a notable uptick.
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Charles Shi (Needham & Company) asked why Applied Materials’ China revenue trailed a U.S. peer. CFO Brice Hill clarified that share losses were due to inaccessible segments from export rules, not competitive losses, and that share is steady where the company can sell.
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Shane Brett (Morgan Stanley) inquired about DRAM share gains and foundry/logic growth versus peers. Dickerson pointed to strong positions in high-bandwidth memory and advanced logic technologies, attributing performance differences to product mix and regional market access.
Catalysts in Upcoming Quarters
In coming quarters, the StockStory team will closely track (1) the pace and scale of AI-driven demand for advanced logic and memory equipment, (2) the effect of ongoing trade restrictions and China market dynamics, and (3) progress on new product adoption and operational efficiency initiatives. Developments in industry technology roadmaps and the timing of customer production ramps will also be important signals for future performance.
Applied Materials currently trades at $239.40, up from $223.77 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).
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