Applied Materials, Inc. (AMAT) reported strong third-quarter fiscal 2024 results, surpassing both revenue and earnings expectations. The company’s non-GAAP earnings per share reached $2.12, exceeding the Zacks Consensus Estimate by 5.5% and marking a 12% improvement from the same period last year. Net revenues climbed to $6.78 billion, representing a 5% increase year-over-year and surpassing the consensus estimate by 1.6%.
This positive performance was largely driven by the company’s Display and Adjacent Markets and Applied Global Services (AGS) segments. Notably, the Semiconductor Systems segment also contributed significantly to the results. Geographically, Applied Materials experienced strong momentum across the United States, Japan, Korea, China, and Southeast Asia. However, weaker performance in Taiwan and Europe posed a challenge.
Breaking down the segment performance, Semiconductor Systems generated $4.92 billion in revenue, accounting for 72.7% of total net revenues and reflecting a 5.3% year-over-year growth. The segment exceeded the Zacks Consensus Estimate by 2.3%. AGS reported revenues of $1.58 billion (23.3% of net revenues), up 7.9% from the prior year and surpassing the consensus estimate by 0.5%. Revenues from Display and Adjacent Markets reached $251 million (3.7% of net revenues), marking a 6.8% increase year-over-year and beating the consensus estimate by 2.4%. Corporate and Other revenues, however, declined by 54% year-over-year, reaching $23 million (0.3% of revenues).
In terms of geographic performance, revenues in the United States, Japan, Korea, Southeast Asia, and China saw notable growth compared to the previous year. However, Europe and Taiwan experienced revenue declines. The United States recorded $1.05 billion in revenues, contributing 16% to net sales and reflecting a 1.3% year-over-year increase. Japan saw a significant 16.1% growth, generating $555 million in revenues. Korea’s revenues reached $1.1 billion, representing a 11.5% year-over-year increase. Southeast Asia witnessed impressive growth of 137.8%, generating $428 million in revenue. China’s revenues reached $2.15 billion, indicating a 24.2% year-over-year growth. Conversely, Europe experienced a 48.7% decline in revenue, reaching $339 million. Taiwan’s revenue fell by 14.6% to $1.15 billion.
Looking ahead, Applied Materials provided guidance for the fiscal fourth quarter, projecting net sales of $6.93 billion (+/-$400 million). The Zacks Consensus Estimate for the quarter is pegged at $6.89 billion. The company anticipates Semiconductor Systems, AGS, and Display sales to reach $5.1 billion, $1.61 billion, and $200 million, respectively. Applied Materials expects a non-GAAP gross margin of 47.4% and non-GAAP operating expenses of $1.275 billion. The company projects a non-GAAP tax rate of 12.5%. Management forecasts non-GAAP earnings per share of $2.18 (+/-$0.18), while the Zacks Consensus Estimate stands at $2.11.
