Applied Materials (AMAT 0.41%), a leading maker of semiconductor manufacturing equipment, released its fiscal 2024 fourth-quarter results on Nov. 14, posting record revenues despite certain market challenges. Its non-GAAP diluted earnings per share (EPS) of $2.32 surpassed analysts' expectations of $2.19. Revenue rose 4.8% to $7.05 billion, exceeding management’s guidance of $6.93 billion. The quarter showcased robust financial performance, with both GAAP and non-GAAP operating income hitting new records.
| Metric | Fiscal Q4 2024 Result | Fiscal Q4 2024 Analysts' Estimate | Fiscal Q4 2023 Result | % Change YOY |
|---|---|---|---|---|
| Revenue | $7.05 billion | N/A | $6.72 billion | 4.8% |
| EPS (non-GAAP) | $2.32 | $2.19 | $2.12 | 9.4% |
| Operating income (non-GAAP) | $2.06 billion | N/A | $1.97 billion | 4.6% |
| Net income | $1.73 billion | N/A | $2.00 billion | (13.6%) |
Source: Analysts' estimates provided by FactSet.
Business Overview and Strategic Focus
Applied Materials is a key supplier of manufacturing equipment and services to the semiconductor industry. It serves as a critical partner to key chipmakers like TSMC and Samsung. The business is divided into three segments: semiconductor systems, applied global services, and display. The semiconductor systems segment dominates: It delivered revenues of $5.18 billion in the quarter, driven by a demand for advanced chips for AI and IoT applications.
Over the course of the fiscal year, Applied Materials concentrated on enhancing its leadership in semiconductor systems and expanding its service-based offerings through applied global services. A significant focus was placed on research and development, with investments rising to $858 million, ensuring the company's continued ability to deliver innovative solutions to complex technological challenges.
Quarterly Highlights and Financial Performance
For the company's fiscal Q4, which ended Oct. 27, the semiconductor systems segment reported revenue of $5.18 billion, up from the previous year's $4.88 billion. However, the segment's operating margins dipped slightly due to moderating demand in specific markets. The applied global services segment showed impressive performance with revenue growing to $1.639 billion from the year-earlier $1.471 billion. That segment benefited from improved operating margins, which contributed to stable service revenue streams.
The company's ability to maintain partnerships with major players like TSMC and Samsung underscores its solid market positioning. Both partnerships support its efforts to stay at the forefront of technological innovation. However, challenges persist in less prominent areas. Notably, the display segment's revenue declined to $211 million from $298 million, indicating market constraints.
The company's financial strength was also demonstrated by its robust increase in cash and cash equivalents to $8.02 billion as of the end of the quarter, up from $6.13 billion a year earlier. This enhances its flexibility when it comes to navigating potential supply chain disruptions or economic volatility.
Looking Ahead
For the first quarter of its fiscal 2025, Applied Materials projects revenue of approximately $7.15 billion, and non-GAAP EPS of around $2.29. The forecast reflects confidence that the company will maintain its growth momentum, driven by ongoing demand growth in the semiconductor industry, powered by AI expansion and data center requirements. These trends support optimism about its future performance, although challenges like market seasonality and cyclicality in specific product lines may continue to influence results. However, management also acknowledges that geopolitical tensions, notably with regard to China, will require adaptive strategies to address fluctuating market dynamics.
