Applied Materials, Inc. ((AMAT)) has held its Q3 earnings call. Read on for the main highlights of the call.
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In the latest earnings call, Applied Materials, Inc. expressed a positive sentiment overall, highlighting record performance and growth in several key areas such as DRAM, advanced packaging, and U.S. manufacturing investments. Despite facing challenges in China and nonlinear demand from leading-edge customers that impact short-term visibility and guidance for Q4, the company remains optimistic about its long-term growth opportunities and market position.
Record Performance in Q3 2025
Applied Materials delivered a record performance in the third quarter of 2025, driven by strong demand across semiconductor systems and services. The company reported total net revenue of approximately $7.3 billion, marking an 8% increase year-over-year.
Robust Gross Margin and Earnings
The company achieved a non-GAAP gross margin of nearly 49%, alongside record non-GAAP earnings per share of $2.48, which is a 17% increase year-over-year, showcasing its robust financial health.
Strong DRAM Market Share
Applied Materials reported a significant boost in revenue from leading-edge DRAM customers, expecting an increase of around 50% in fiscal 2025, supported by record results in the etch business.
Advanced Packaging Growth
The advanced packaging segment is on a growth trajectory, with the business expected to more than double to over $3 billion in the coming years, highlighting the company’s strategic focus on this area.
Investment in U.S. Manufacturing
The company plans to invest more than $200 million in Arizona, building on over $400 million invested in U.S. manufacturing infrastructure over the past five years, reinforcing its commitment to domestic manufacturing.
24 Consecutive Quarters of Service Business Growth
Applied Materials has achieved growth in its service business for 24 consecutive quarters, with more than two-thirds of service revenue coming from subscriptions, indicating a stable and recurring revenue stream.
Uncertainties in China Business
The company faces uncertainties in its China business, with expectations of sequentially lower revenue and earnings due to the digestion of capacity and pending export license applications.
Nonlinear Demand from Leading-Edge Customers
Demand from leading-edge customers has been nonlinear, affected by market concentration, fab timing, and extended order commitment times, leading to a shorter visibility window.
Lower Visibility and Guidance for Q4 2025
For fiscal Q4, Applied Materials expects a 4.9% year-over-year decrease in total revenue, with a 9% decrease in non-GAAP EPS, primarily due to challenges in China and nonlinear demand.
Forward-Looking Guidance
Despite the challenges, Applied Materials remains on track for mid-single-digit growth in fiscal 2025, marking its sixth consecutive year of revenue growth. The company anticipates stable revenue contribution from China at around 29% in Q4 and expects overall revenue of $6.7 billion, down 4.9% year-over-year. The company remains optimistic about long-term growth opportunities, emphasizing its leadership in AI-driven sectors and investment in advanced packaging.
In summary, Applied Materials, Inc.’s earnings call reflected a generally positive sentiment with record performance in several areas, despite some short-term challenges. The company remains confident in its long-term growth prospects, driven by strategic investments and a strong market position.