Applied Materials EPS Growth and Challenges Ahead

Investors are gearing up as Applied Materials prepares to release Q1 2025 earnings. The company is expected to report a profit of $2.28 per share, reflecting a 7% growth. However, revenue outlook concerns following disappointing guidance may impact stock performance.

Date: 20-01-2025

AI Rating: 5

Earnings Per Share (EPS)
Applied Materials is projected to report an EPS of $2.28 for Q1 2025, representing a 7% increase from $2.13 in the same quarter last year. For fiscal 2025, analysts anticipate EPS to be $9.37, illustrating an 8.3% growth from $8.65 in fiscal 2024. Furthermore, the expected EPS for fiscal 2026 is $10.16, indicating a continuous upward trend.

Revenue Growth
The company reported a strong adjusted EPS of $2.32 and revenue of $7.1 billion in Q4 2024; however, there are concerns regarding Q1 2025 guidance. They forecast revenue between $7.1 billion to $7.2 billion, which falls below consensus estimates, and a notable 28% decline in display revenue. This projected drop is causing market unease despite the growth in EPS.

Market Performance
Shares of Applied Materials have seen a 25.2% increase over the past year, although this lags slightly behind the S&P 500's 26.5% gain. Despite the company exceeding earnings expectations in the past four quarters, stock performance took a hit after the guidance for Q1 2025 led to a 9.2% drop post-Q4 2024 earnings report.

Analysts' Ratings
Despite recent challenges, analysts maintain a "Moderate Buy" rating on AMAT stock. Out of 33 analysts, 20 rate it as a "Strong Buy," and the average price target suggests an upside potential of 10.1%. This optimism indicates that investors might still see long-term value, particularly in light of the projected EPS growth against the backdrop of revenue challenges stemming from external pressures in the semiconductor sector.

Stocks: AMAT