Applied Materials jump on Q1 earnings beat, Q2 guidance

Shares of Applied Materials (AMAT) jumped on Friday after posting first-quarter results that topped Wall Street estimates on both the top and bottom lines. The company's guidance for the second quarter was also better than expected.

Yahoo Finance's Julie Hyman and Josh Lipton report the details of the quarterly update.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Stephanie Mikulich

Video Transcript

JULIE HYMAN: Moving on, sticking in the chip sector but talking about the chip-equipment sector, Applied Materials shares, they are on the rise today after beating first-quarter earnings estimates on the top and bottom lines. They also issued some stronger-than-expected guidance for the second quarter. The shares up some 7%.

Interesting here because this is not the same kind-- it's not exactly the same story, right? You can't kind of put all of the chip stuff together because here we're talking about chip-making equipment for memory chips, not necessarily for GPUs and for the kind of AI chips here. So it's DRAM memory chip equipment revenues and also demand from China that apparently was fueling the numbers.

JOSH LIPTON: See, I thought that was really interesting to me because the China-- AMAT is restricted in what they can sell to China because, obviously, we know Washington has export controls in place. They want to slow down China's chip ambitions. But even still, China was called out in this earnings print, right? I looked at sales over there. Doubled to $3 billion for AMAT. So accounted for about 45% of the company's total.

JULIE HYMAN: Yeah, I did see a couple of cautious comments from some of the analysts talking about the valuation here, that, you know, it's kind of fully priced, the outlook for the company. But we'll see if that affects them.

JOSH LIPTON: Yeah, to your point there, Mehdi Hosseini, who is a very smart tech analyst over at Susquehanna, that's the note he put out. He's neutral because after the run it's had-- and it's up about 75% now in the past 12 months. He thinks that's just, obviously, looking a little rich to him. But he is not the majority opinion. Most still have a buy on this one.