Applied Materials Stock Declines on China Sales Warning Despite Earnings Beat
Shares of Applied Materials Inc. (NASDAQ: AMAT) dropped more than 4% in premarket trading on Friday after the company warned that spending on chipmaking equipment in China is expected to decline next year due to tightened U.S. export restrictions.
The semiconductor equipment maker said expanded U.S. curbs on the export of advanced chip equipment to China would likely reduce its fiscal 2026 revenue by around $600 million. The company also noted that approximately $110 million worth of products were not shipped during its fiscal fourth quarter because of trade restrictions.
Despite the warning, the company's fourth-quarter results surpassed analyst expectations. Applied Materials reported adjusted earnings of $2.17 per share on revenue of $6.8 billion. This topped estimates of $2.11 per share and $6.68 billion in revenue.
Looking ahead, the company guided for first-quarter adjusted earnings of $2.18 per share on revenue of $6.85 billion at the midpoint, which is above consensus expectations of $2.15 per share and $6.80 billion in revenue.
Applied Materials added that rising business investments in artificial intelligence were expected to drive stronger demand for semiconductor equipment in the second half of next year.
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