Nobody talks about Applied Materials. They should. The 59-year-old company builds the machines behind every advanced chip on earth - Nvidia’s GPUs, Apple’s processors, every AI accelerator in every data center. It just posted the best quarter in its history.
Revenue hit a record $9.12 billion, up nearly 25%. EPS of $3.50 rose 41%. Cash from operations hit $3 billion. Then came the guidance: Q4 revenue of $10.25 billion, up 51% year over year, with EPS growth of 85%. Growth isn’t slowing - it’s accelerating.
The stock barely moved. AMAT is still down more than 25% from its peak of $740, and Michael Burry - the investor who predicted the 2008 housing crash - shorted it near the top and already took profits. Insiders have sold 69 times in the past year. Not one has bought.
The machines that build AI chips are printing money. The people who run the company are selling the stock.
Here's how the community voted
Q3 was the best quarter in Applied Materials’ 59-year history, and Q4 guidance implies it’s about to get shattered. Revenue guidance of $10.25 billion is up 51% year over year; EPS guidance of $4.02 implies 85% growth. Customers are providing rolling eight-quarter forecasts with commitments extending to 2030.
Applied Materials leads in the three segments driving roughly 80% of semiconductor equipment growth: leading-edge foundry logic, DRAM, and advanced packaging. Advanced packaging revenue alone is growing over 70% this year. Every advanced AI chip - Nvidia’s GPUs, Google’s TPUs, all of them - gets built using AMAT’s equipment.
Analyst consensus is Strong Buy with an average target of $629. The company generated $3 billion in cash from operations last quarter and returned $860 million to shareholders. China revenue has dropped from 40% to 28% of the total, reducing the export-control risk.
Michael Burry - the investor who predicted the 2008 housing crash - shorted AMAT at $729 and covered for an estimated 24% gain. He bet semiconductor stocks were due for a 30%+ correction, writing that the semiconductor index was at “a level not seen since 2000.” He’s also bet against Nvidia and the SOXX semiconductor ETF.
Insiders are selling at a historic pace. CEO Gary Dickerson has sold $105 million in stock over the past six months across 15 separate transactions - and not a single insider has bought. Applied Materials also paid a $252 million fine - the second-largest ever imposed by BIS - for illegally exporting semiconductor equipment to China.
At roughly 32x forward earnings, AMAT trades more expensively than Nvidia despite being a cyclical business with a history of severe downturns. Free cash flow has missed expectations in four of the last five quarters. When the last semiconductor equipment cycle turned, the stock fell over 40% in under a year.
Q3 was the best quarter in Applied Materials’ 59-year history, and Q4 guidance implies it’s about to get shattered. Revenue guidance of $10.25 billion is up 51% year over year; EPS guidance of $4.02 implies 85% growth. Customers are providing rolling eight-quarter forecasts with commitments extending to 2030.
Applied Materials leads in the three segments driving roughly 80% of semiconductor equipment growth: leading-edge foundry logic, DRAM, and advanced packaging. Advanced packaging revenue alone is growing over 70% this year. Every advanced AI chip - Nvidia’s GPUs, Google’s TPUs, all of them - gets built using AMAT’s equipment.
Analyst consensus is Strong Buy with an average target of $629. The company generated $3 billion in cash from operations last quarter and returned $860 million to shareholders. China revenue has dropped from 40% to 28% of the total, reducing the export-control risk.
Michael Burry - the investor who predicted the 2008 housing crash - shorted AMAT at $729 and covered for an estimated 24% gain. He bet semiconductor stocks were due for a 30%+ correction, writing that the semiconductor index was at “a level not seen since 2000.” He’s also bet against Nvidia and the SOXX semiconductor ETF.
Insiders are selling at a historic pace. CEO Gary Dickerson has sold $105 million in stock over the past six months across 15 separate transactions - and not a single insider has bought. Applied Materials also paid a $252 million fine - the second-largest ever imposed by BIS - for illegally exporting semiconductor equipment to China.
At roughly 32x forward earnings, AMAT trades more expensively than Nvidia despite being a cyclical business with a history of severe downturns. Free cash flow has missed expectations in four of the last five quarters. When the last semiconductor equipment cycle turned, the stock fell over 40% in under a year.
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