The Nasdaq Composite (^IXIC 0.26%) has been particularly volatile lately, as investors try to get a handle on what the challenging macroeconomic environment means for the growth-oriented companies that dominate the index. In particular, tech stocks have been under considerable pressure, but fundamentally, many of them still have solid business prospects and opportunities for long-term growth.
The Nasdaq rose slightly Friday morning, and a couple of tech companies were in the spotlight. Cybersecurity specialist Palo Alto Networks (PANW +3.00%) enjoyed a strong gain as the prospects for its business remained strong, and Applied Materials (AMAT 3.14%) managed to move higher despite an increasingly difficult industry environment.
Palo Alto stays protected
Shares of Palo Alto Networks jumped almost 10% early Friday morning. The cybersecurity company reported significant growth in its results for the fiscal first quarter that ended Oct. 31.
Palo Alto's revenue climbed 25% year over year, hitting $1.56 billion. The company reversed a year-ago loss with modest net income of $20 million, and after making typical accounting allowances, adjusted net income of $266 million soared 56% from year-ago levels. Adjusted earnings came in at $0.83 per share, topping its previous guidance by $0.15.
NASDAQ: PANW
Key Data Points
Other metrics remain attractive as well. Billings climbed 27% to $1.75 billion, and Palo Alto has $8.3 billion in remaining performance obligations under existing agreements, up 38% in the past 12 months. Moreover, annualized recurring revenue for its next-generation security platform jumped 67% to $2.11 billion, showing the emphasis that Palo Alto has put on building up that part of its business.
Investors were particularly pleased that Palo Alto boosted its guidance for fiscal 2023, particularly the $0.24- to $0.27-per-share boost in adjusted earnings for the full year to a new range of $3.37 to $3.44 per share. With ongoing success for network and cloud security products and rollouts of new features, Palo Alto is taking maximum advantage of the need among top customers to protect their digital infrastructure from potential attack.
Applied Materials powers ahead
Shares of Applied Materials inched higher by about 1%, giving up larger gains earlier in the session. The semiconductor chip maker reported fiscal fourth-quarter results for the period ending Oct. 30 that showed its resilience even in the face of deteriorating fundamentals in the semiconductor industry.
Applied Materials posted revenue of $6.75 billion, up 10% from year-ago levels. Among the company's segments, foundry and logic products got the biggest boost, while DRAM and flash memory detracted from overall performance. Declining margin figures weighed heavily on the tech company's bottom line, with net income falling 7% year over year. However, on an adjusted basis, the decline in profits was limited to 1%, and a more substantial drop in the number of shares of Applied Materials stock outstanding helped to give adjusted earnings a 5% year-over-year boost to $2.03 per share.
NASDAQ: AMAT
Key Data Points
Industry uncertainty led Applied Materials to set a fairly wide range for guidance in the coming quarter. The company sees revenue of between $6.3 billion and $7.1 billion in the fiscal first quarter, and adjusted earnings could come in between $1.75 and $2.11 per share.
The semiconductor industry hasn't resolved all of its challenges just yet, so it's premature to sound an all-clear for Applied Materials. Yet with the company taking important steps to bolster its business and adapt to changing conditions, shareholders seem optimistic about Applied Materials' chances for a continued recovery.
