Applied Materials Inc. (NASDAQ:AMAT) delivered an optimistic outlook for the upcoming quarter after posting stronger-than-expected fiscal third-quarter results, buoyed by continued growth in China despite facing regulatory challenges.
Applied Materials reported its third-quarter earnings and revenue, both exceeding analyst expectations. The company posted adjusted diluted earnings per share of $2.05, surpassing the previous year’s $1.85, while revenue climbed to $6.78 billion from $6.43 billion. Analysts had forecasted EPS of $2.02 on revenue of $6.54 billion.
A key factor in the revenue boost was increasing demand for data storage, particularly in Dynamic Random Access Memory (DRAM) products, which saw an increase in contribution to 24% of total revenue, up from 17% in the prior year. This improvement came despite earlier concerns about a potential downturn in the Chinese DRAM market.
Sales in China, which make up a significant portion of the company’s growth, jumped to $2.15 billion, compared to $1.73 billion in the same period last year. U.S. sales also experienced a modest rise, reaching $1.05 billion. The growth in China is notable given the company’s ongoing challenges with U.S. export restrictions and geopolitical tensions.
Looking ahead to the fiscal fourth quarter, Applied Materials is forecasting diluted EPS between $2.00 and $2.36, with a midpoint of $2.18, alongside revenue of $6.93 billion, plus or minus $400 million. This outlook is in line with market expectations of adjusted EPS of $2.14 on revenue of $6.92 billion.