Applied Materials (AMAT): Strong Quarter and Guidance Driven by DRAM
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Goldman Sachs publishes a positive first-take on Applied Materials following its fourth fiscal quarter results, anticipating the strong performance and guidance will push the stock higher. Applied Materials reported revenue of $7.012 billion, exceeding both consensus estimates of $6.89 billion and Goldman Sachs expectations of $6.927 billion. The company achieved a gross margin of 49.1% and non-GAAP earnings per share of $2.38, beating market estimates of $2.21.
The exceptional quarter was primarily driven by robust DRAM demand. DRAM systems revenue reached $1.748 billion, significantly surpassing consensus estimates of $1.554 billion. This strength offset weaker NAND revenue, which came in at only $206 million. Looking ahead, management's first fiscal quarter guidance reinforced this positive momentum. The company projected revenue at a midpoint of $7.65 billion and non-GAAP earnings per share at $2.64, dramatically exceeding market consensus and reflecting a 9.1% sequential growth.
Goldman Sachs notes that while investor expectations had already improved due to broader wafer fabrication equipment growth driven by AI and high-bandwidth memory, these results and forward guidance still managed to surprise positively. The firm reiterates its Buy rating on Applied Materials with a twelve-month target price of $310. However, at the current trading price of $339.88, the stock implies an 8.8% downside to this specific target. Analysts suggest investors will closely monitor management's commentary on 2026 equipment spending trajectories and ongoing export restrictions impacting Chinese revenue.