Applied Materials Q4 preview: Will continued weakness in chip industry dent earnings?
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Applied Materials (NASDAQ:AMAT) is scheduled to announce Q4 earnings results on Thursday, Nov. 17, after market close.
The consensus EPS estimate is $1.75 (-9.8% Y/Y) and the consensus revenue estimate is $6.44B (+5.2% Y/Y).
Over the last 2 years, AMAT has beaten EPS and revenue estimates 75% of the time.
Over the last 3 months, EPS estimates have seen 3 upward revisions and 18 downward. Revenue estimates have seen 4 upward revisions and 14 downward.
The chipmaker's stock dipped after it provided Q4 outlook to reflect new chip export control rules, which are expected to reduce Q4 sales by ~$400M.
Additionally, data from the Semiconductor Industry Association Worldwide showed a slowdown in semiconductor sales, down 6% sequentially, for the quarter ended Sept. 30.
But New Street Research upgraded Applied Materials (AMAT), saying the pain in the chip industry should end soon and now may be a good time to start building positions.
Bank of America remains bullish on Applied Materials (AMAT) due to optimism surrounding the CHIPS Act. More recently, it said the bull case for semiconductors is starting to become compelling on account of high profitability, high barriers to entry and chip stocks' underperformance.
UBS included Applied Materials (AMAT) to its tech focus list "due to its leadership in semiconductor equipment, which stands to benefit from strong demand driven by big data and AI".
Q3 recap:

The semiconductor firm's shares edged higher after its Q3 results beat expectations and its guidance seemed to stave off fears of a slowdown.
However, some analysts noted that there may be some softening in the memory market in 2023.
But Needham expects to see supply chain improvements and sequential growth through Q2 2023.

SA contributor Cory Cramer said Applied Materials (AMAT) is a high quality but deeply cyclical stock, rating the stock Hold for now as he waits for a lower entry point.
Shares of Applied Materials (AMAT) declined 34.5% in the last one year, underperforming the S&P 500 index by a very wide margin.