Applied Materials misses on Q2 earnings, says underlying demand remains robust
Applied Materials released its second quarter earnings report after hours on Thursday, missing investors’ expectations on both top and bottom lines. The company offered no guidance for its third quarter, but did acknowledge that the demand for its equipment and services remained ‘robust.’ Yahoo Finance’s Myles Udland breaks down the company’s earnings report on The Final Round.
Video Transcript
MYLES UDLAND: Applied Materials here reporting adjusted earnings per share coming in a bit light of expectations, $0.89 per share in the company's fiscal second quarter. The street was looking for adjusted earnings of $0.91. Revenue, also, coming in slightly below estimates, $3.96 billion against expectations for $4.03 billion. Now the company's CEO Gary Dickerson saying in the release that, obviously, the COVID situation remains in his words, "fluid."
But based on the visibility we have today, our supply chain is recovering, and underlying demand for our semiconductor equipment and services remains robust. Now the stock down a little bit in the after hours session, off about 2.5%, but was up some 5.7% during today's session on some positive news that we got on US semiconductor manufacturing here in the US. And Akiko, I think part of a bigger maybe onshoring story that seems likely to play out over the next couple of years.
AKIKO FUJITA: Yeah, some pretty significant news today. Coming out of Arizona, really, TSMC, which is a Taiwan Semiconductor manufacturing company, this is the largest semiconductor foundry globally. And we got news today that they are, in fact, in discussions with the Trump administration to build out a multibillion dollar factory in Arizona.
The timeline right now, it seems to be at 2023 is what Bloomberg and Wall Street Journal is reporting. The significance, of course, of all of this is that it comes at a time when the Commerce Department is certainly looking to tighten export controls to really address the national security concerns the administration has talked about. But you connect the dots here, and the reason why AMAT was up so much is because they provide equipment directly to TSMC.
And there's been some concerns, especially with the US China trade tensions, that a lot of that would be halted because of the tariffs and because of the tighten restrictions between the two countries. And you know, I think in a broader sense, this is a pretty significant story. Because we've talked so much about how this coronavirus is likely to bring more and more manufacturing onshore. If the administration is able to pull this off, that would certainly, at least from an optic standpoint, be a pretty significant win.
