Applied Materials, one of the world's largest chip equipment makers, reports results for its fiscal fourth quarter today (Thursday) after the US market close. According to analysts, the expectation is earnings of about $4.05 per share and revenue of about $10.3 billion, in line with company guidance of about $10.25 billion, plus or minus half a billion.
Why did the stock plunge?
According to reports, Applied's stock fell nearly 37% over the past month as investors fled AI and chip stocks. Chipmaking equipment is an early link in the chain: when chipmakers plan to expand production they buy equipment, and when they fear a slowdown they cut orders. So the stock is especially sensitive to any sign of weakening demand for AI chips, and this week, with the Nvidia affair and rising rates, did not help.
What to look for in the report?
Three things: next-quarter guidance, which shows what customers such as TSMC, Samsung and Intel plan to spend; demand for equipment to make advanced memory (HBM), a central part of AI chips; and the impact of export controls on China, once a large market for equipment makers.
The Israeli connection
Applied Materials has a large operation in Israel, including the development center of its Process Diagnostics and Control (PDC) division, recently headed by newly appointed Eitan Binyamini. The division develops systems for measuring and inspecting silicon wafers, a field in which Israel's Nova and Camtek also operate. Strong results from Applied would be a good sign for Israel's whole chip equipment industry. Weak results would signal the slowdown the market fears is already here.
