Applied Materials forecasts upbeat first-quarter revenue on resilient demand

By Samrhitha A

(Reuters) -Applied Materials forecast first-quarter revenue above analysts’ estimates on Thursday, but the company’s shares fell more than 7% after the bell following a report that the semiconductor equipment maker was under investigation.

Reuters reported Applied Materials (NASDAQ:) is under U.S. criminal investigation for potentially evading export restrictions on China’s top chipmaker SMIC.

The United States has restricted shipments of advanced chips and chipmaking equipment to China for national security, and the Justice and Commerce departments launched a task force earlier this year to investigate and prosecute criminal violations of export controls.

The rules are aimed at stemming the flow of U.S. technology that could be used to bolster China’s military and intelligence capabilities.

“The rules are complex, and while we are working with the government to clarify certain details, we see no incremental material impact to Applied at this time,” CEO Gary Dickerson said on a post-earnings call.

Santa Clara, California-based Applied Materials, expects first-quarter revenue of $6.47 billion, plus or minus $400 million, higher than analysts’ estimates of $6.37 billion, according to LSEG data.

Recent earnings from Intel (NASDAQ:) and Advanced Micro Devices (NASDAQ:) have offered more evidence a recovery is gathering pace in the personal computer market, boding well for an industry that had been grappling with a supply glut after the pandemic.

Companies focusing on generative AI tools this year has also led to an increase in spending for Applied Materials’ equipment.

On an adjusted basis, the company earned $2.12 per share in the fourth quarter, beating estimates of $2.00. Revenue also topped expectations.

Rival Lam Research (NASDAQ:) last month forecast revenue below estimates due to weak memory chip demand, while KLA forecast revenue above expectations on growing adoption of AI tools.