Summary
Shares of Applied Materials jumped nearly 12% in premarket trading after the semiconductor equipment maker forecast second-quarter revenue and profit well above Wall Street expectations. This outlook reinforces investor confidence that AI-related capital spending in memory, logic and advanced packaging remains strong despite broader market volatility.
NEW YORK, Feb. 14 — Shares of Applied Materials rose sharply in early trading after the company issued second-quarter guidance that beat analysts’ estimates, highlighting continued investment in artificial intelligence infrastructure.
This optimistic outlook comes as hyperscalers increase AI data center capacity and chipmakers accelerate production of high-bandwidth memory (HBM) and advanced logic chips to support generative AI workloads.
Forecasts exceed estimates
Applied Materials expects revenue of approximately $7.65 billion, give or take $500 millionabove the average analyst estimate of $7.01 billion, according to LSEG data.
Adjusted profit is expected to reach $2.64 per sharecomfortably ahead of the consensus forecast of $2.28.
Chief executive Gary Dickerson said the performance was “fueled by accelerating industry investment in AI computing,” with growing demand for cutting-edge logic, HBM and advanced packaging technologies.
AI boom tightens memory markets
The increase in orders reflects tightening supply chains for memory and advanced chips as AI training and inference workloads consume large volumes of DRAM and HBM.
Industry body SEMI forecast in December that global sales of wafer manufacturing equipment would increase by about 9% to $126 billion in 2026 and another 7.3% to $135 billion in 2027highlighting sustained capital spending by chipmakers.
Analysts say Applied Materials is well positioned because of its exposure to DRAM, HBM, advanced logic and packaging equipment – all critical components of next-generation AI processors.
Sector-wide elevator
These strong forecasts boosted peers in the semiconductor equipment sector.
Actions of ASMLthe world’s largest supplier of chipmaking machines, rose about 1.8%, while Search Lam gained around 2%. KLA Corp. also traded higher.
Applied Materials shares are now on the rise 28% since the start of the yearsurpassing the Philadelphia Semiconductor Index (SOX)which gained around 14% over the same period.
Multi-year growth story
The results reinforce a broader market thesis: AI infrastructure spending is entering a multi-year phase of development, with semiconductor equipment suppliers becoming the biggest beneficiaries.
As chipmakers expand their wafer fabs and invest in advanced packaging capabilities to meet AI demand, capital goods suppliers such as Applied Materials are likely to capture sustained order growth, particularly if memory markets remain tight.
Why it matters
The semiconductor equipment industry often serves as an early-cycle indicator for chip demand. Applied Materials’ strong forward guidance suggests that AI-related capital spending is not only intact, but accelerating.
For investors, the results indicate:
- Continued Resilience in AI Spending
- Strength in Memory and Advanced Packaging Markets
- Potential for sustained profit improvement among equipment manufacturers
If demand for AI-enabled semiconductors remains high, equipment suppliers could benefit from multi-year order visibility – a key factor supporting current valuations.
FAQs
Q1: Why did Applied Materials shares jump?
The company forecast second-quarter revenue and profit above analyst estimates, reflecting strong demand for AI-based chipmaking equipment.
Q2: What is driving demand?
The expansion of AI data centers and the increasing use of high-bandwidth memory are prompting chipmakers to increase spending on advanced wafer fabrication and packaging tools.
Q3: How does this affect the wider industry?
Peers such as ASML, Lam Research and KLA also saw market share gains, reflecting optimism about sustained capital spending in semiconductors.
Q4: What are the revenue projections?
Applied Materials expects second-quarter revenue of about $7.65 billion and adjusted earnings of $2.64 per share.
Q5: Why is memory important for AI?
AI workloads require large volumes of DRAM and high-bandwidth memory, tightening supply and driving new manufacturing investments.
Q6: How has the stock performed this year?
Shares are up about 28% year to date, outperforming the Philadelphia Semiconductor index.