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Shares of the semiconductor firm Applied Materials experienced a decline on Friday following the announcement of its financial performance for the first quarter of fiscal 2025. As of 2:15 p.m. ET, the stock was trading 6% lower, marking a drop of over 30% from its previous peak.
Lower-than-anticipated guidance
Applied Materials leverages its technology to support semiconductor production. For the first quarter, the company reported revenues of $7.17 billion, aligning perfectly with its management’s guidance. Additionally, its adjusted earnings per share (EPS) for the quarter stood at $2.38, reflecting a 12% increase compared to the same period last year. Overall, the first-quarter results did not reveal any significant issues.
Looking ahead to the second quarter, Applied Materials projects revenues of approximately $7.1 billion. While this figure represents an increase year over year, it fell short of investors’ expectations. The current challenge does not stem from a lack of demand but rather from new export restrictions, which are anticipated to impose a $400 million impact on fiscal 2025, with half of that expected to affect the second quarter, as indicated by management.
This scenario suggests that investors are recalibrating their forecasts for Applied Materials stock in light of evolving macroeconomic factors.
A potential buying opportunity
Applied Materials plays a crucial role in the semiconductor industry, and long-term demand outlooks generally seem favorable. Historically, the stock has often encountered downturns right before periods of stagnation in revenue and earnings. Given the complexities arising in 2025, this current situation may reflect similar trends.
While challenges may appear, Applied Materials is well-positioned to navigate these obstacles over time, benefiting from its stronghold in a resilient and growing sector. Consequently, this stock might present a viable buying opportunity in the near future, particularly as its valuation becomes more appealing. However, investors are encouraged to adopt a long-term perspective and remain prepared for potential volatility in the interim.
Source
www.fool.com