By Jaspreet Singh
(Reuters) -Applied Materials expects first-quarter sales on Thursday to be below Wall Street estimates, a sign of sluggish demand for chip-making equipment beyond AI-powered chips, lifting shares in extended trading will fall by almost 5%.
Despite strong demand for advanced AI chip equipment, weakness in certain markets has kept spending low, hurting demand for companies like Applied Materials (NASDAQ:).
“Any sign of slowing momentum for the recent explosive AI-related growth … is being rebuked by investors,” said Brooks Idlet, an analyst at CFRA.
In addition, stricter export restrictions on high-value chips and certain equipment from the United States to China have continued uncertainty for both tool suppliers and chip makers.
Applied also faces competition from other chip equipment suppliers such as KLA Corp, Lam Research (NASDAQ:) and Europe’s ASML Holding (AS:).
Rival ASML had earlier in October forecast lower-than-expected revenue and bookings for 2025 due to continued weakness in parts of the semiconductor market despite a boom in AI-related chips.
The largest U.S. semiconductor equipment maker expects first-quarter revenue of about $7.15 billion, plus or minus $400 million, below the average analyst estimate of $7.22 billion, according to data compiled by LSEG.
It forecast adjusted earnings per share of about $2.29, plus or minus $0.18, which topped estimates of $2.27.
Revenue rose 5% to $7.05 billion for the fourth quarter ended Oct. 27, beating expectations of $6.95 billion. China accounted for 30% of the company’s revenue this quarter, compared to 44% in the same period last year.
Adjusted earnings per share of $2.32 also beat expectations of $2.19 in the fourth quarter.
