This time last year, things looked pretty grim for Applied Materials (NASDAQ:AMAT). Nowadays, the future couldn't look brighter.

First-quarter revenues for the leading chip-equipment maker climbed to $1.56 billion, up 27% sequentially and 48% year over year. Gross margins improved three percentage points sequentially to 43.5%, and pro forma net income doubled sequentially to $200 million, reversing a year-ago loss. The company smashed last quarter's forecast and analyst expectations on both counts. Also, new orders jumped 32% sequentially to $1.68 billion.

CEO Mike Splinter cites higher consumer electronics and IT spending for the pickup, specifically the strength in personal computers and cell phones that have benefited the Dells (NASDAQ:DELL), Motorolas (NYSE:MOT), and Nokias (NYSE:NOK) of the world. Yet some investors are concerned that growth will stall toward the end of the year, as chipmakers see efficiency gains from newer chip-making equipment. Maybe, but Applied Materials is in great shape, sitting on about $5.7 billion in cash. Management is pondering a number of uses for that money, including acquisitions, stock buybacks, or a dividend.

The company increased its second-quarter expectations, forecasting sequential sales growth of 20% to about $1.87 billion and earnings of $0.17 to $0.19 per share. That would beat prior analyst estimates of about $0.11 per share on $1.48 billion in sales. New orders are expected to rise another 30%. Likely, it was this that propelled the stock 5% higher to $23.50 in after-hours trading yesterday and boosted competitors KLA-Tencor (NASDAQ:KLAC) and Novellus (NASDAQ:NVLS), among others.

While Applied Materials is anything but cheap, the company's strong market position and improving performance make the stock surprisingly reasonable in this price range.

Fool contributor Jeff Hwang has no position in Applied Materials. Give us your take on the Applied Materials discussion board -- only at