Perhaps my call for weakness in the semiconductor sector was a tad premature.

Applied Materials (Nasdaq: AMAT), which does happen to be a long-term outperform CAPScall of mine, reported first-quarter earnings Thursday night, crushing Wall Street's expectations and squashing, at least for now, any expectations of mine that semiconductor demand is rapidly dwindling.

For the quarter, Applied Materials posted a profit of $0.18 on revenue of $2.19 billion, which easily surpassed the $0.12 profit and $1.97 billion in sales analysts had forecasted. Although revenue was down 19% from the previous year, net orders jumped 26% sequentially. Similarly, rival KLA-Tencor (Nasdaq: KLAC) also crushed estimates in late January, posting a profit of $0.72 versus the consensus estimate of $0.66 while also seeing revenue drop.

The question now is: Should you buy Applied Materials after these encouraging results from both the stock and its peers? My answer remains a resounding, "Yes!" Now let me tell you why.

It's all about the cloud
Without question, the driving force behind Applied Materials' growth has been its foundry segment, which provides the equipment that semiconductor companies need to make the chips that go into smartphones and tablets. Taiwan Semiconductor, United Microelectronics, and Intel have been busy inking contracts with smartphone and tablet manufacturers to provide those chips, which has, in turn, kept Applied Materials' orders strong.

It isn't a surprise that Apple (Nasdaq: AAPL) sold 111% more iPads in the first quarter 2012 than it did in the year-ago period, or 37 million iPhones. The demand for cloud-computing devices is incredible, and the entire chain of product development from start to finish is benefiting.

If this is the trough, just imagine ...
What has me sold on Applied Materials is the same thing I saw in Whirlpool a few months back. If this company can perform this well when its other business segments are performing so poorly, just imagine how quickly its top line is going to grow when those other segments find solid footing. I'm speaking of the display and solar segments, which have been under incredible pressure as of late.

The television sector is in the midst of a multi-year decline -- as if Sony's eight straight years of losses wasn't enough indication. Television prices are in decline, and TV manufacturers have chosen instead to shutter production until either pricing or demand improves. Likewise, solar supply could be out of whack even worse than TV demand. With bankruptcies arising with some regularity now, it isn't surprising that Applied Materials' new solar orders dropped to just $33 million in the recent quarter.

Still, I see a lot of potential from these two segments -- particularly the company's solar segment, which could really augment the company's top-line earnings in a few years.

Foolish roundup
Applied Materials' guidance calls for 5% to 15% sequential sales growth in the second quarter and earnings of $0.20 to $0.28 -- well ahead of the $0.16 consensus. Who said being the biggest in the sector meant slower growth rates? Not this company!

I continue to be optimistic on Applied Materials' long-term outlook. There could be bumps along the way, but I think its dividend and earnings power could be just a few years away from doubling.

Disagree with me? Share your thoughts in the comments section below with your fellow Fools, and consider adding Applied Materials to your free and personalized watchlist.

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