Applied Materials beats sales estimates, raises guidance on AI and Chinese demand

Applied Materials (AMAT) saw its stock increase by 1 .7% in early trading on Friday after the chip tool maker reported better-than-expected results and raised its forecast for demand for artificial intelligence (AI) chips.

Key Points to Remember

Applied Materials reported third-quarter revenue of $6.43 billion.
The maker of products for Intel and TSMC achieved EPS of 1. $85.
Forecast for the fourth quarter was much higher than expected by analysts.

Applied posted revenue of $6.43 billion for its third quarter, down 1% year-over-year. Gross margins of 46.3% increased by 0.2% for the same period. The company reported operating profit of $1.8 billion, with earnings per share (EPS) of $1.85. The company's sales were driven by its "Foundry, Logic and Other" segment, as growing interest in AI has increased demand for chips from Applied's customer base.

The company, which counts chipmakers Intel (INTC) and TSMC (TSM) among its customers, said it expects fourth-quarter earnings to be significantly higher than analysts' estimates, due to chip demand and AI-focused government subsidies. Applied expects next-quarter revenue of $6.51 billion, well above analyst estimates of $5.86 billion.

CEO Gary Dickerson said analysts a revenue call that subsidies would reach hundreds of billions of dollars worldwide over the next five years.