Shares of Applied Materials (AMAT) fell in after-hours trading after the chip company reported earnings for its third quarter of Fiscal Year 2025. Earnings per share came in at $2.48, beating analysts’ consensus estimate of $2.36 per share. In addition, sales increased by 7.7% year-over-year, with revenue hitting $7.3 billion. This beat analysts’ expectations of $7.22 billion.
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Breaking down the numbers further, segment revenues came in as follows:
- Semiconductor Systems: $5,427 billion
- Applied Global Services: $1,600 billion
- Display: $263 million
- Other: $12 million
Based on the image below from Main Street Data, we can see that all segments, except for Other, which was $18 million the year prior, grew year-over-year.
In addition, AMAT returned $1.424 billion to shareholders during the third quarter. Dividends made up $368 million, while buybacks made up the remaining $1.056 billion. This was mainly funded by the $2.634 billion in cash it earned from its operations. The firm has regularly repurchased its shares in each of the most recent quarters.
Outlook for 2025
Looking forward to Q4 2025, management provided the following outlook:
- Revenue of $6.7 billion (plus or minus $500 million) versus estimates of $7.32 billion
- Adjusted earnings per share of $2.11 (plus or minus $0.20) compared to expectations of $2.38
As you can see, guidance was worse than expected, which is what led to the stock’s after-hours decline despite its earnings beat.
What Is the Target Price for AMAT?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on AMAT stock based on 20 Buys and seven Holds assigned in the past three months. Furthermore, the average AMAT stock price target of $205.51 per share implies 9.2% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
