EPS of $1.45 decreased by 39.9% from previous year
Gross margin of 48.8%
Net income of 1.19B
""In our first fiscal quarter of 2025, Applied Materials delivered record revenues surpassing the prior high we set last quarter."" - Gary Dickerson, CEO
In the first quarter of fiscal 2025, Applied Materials Inc achieved record revenues of $7.166 billion, reflecting a 6.84% increase year-over-year and a slight 1.72% growth quarter-over-quarter. This growth is primarily driven by robust performance in the Semiconductor Systems segment, which saw a revenue increase of 9% year-over-year. Despite facing challenges from export restrictions impacting sales, particularly in China, management remains optimistic about future revenue growth and innovation potential in advanced semiconductor technologies. Key milestones in AI-related demand and strategic investments in leading-edge technologies are set to position Applied Materials for continued success.
**Gross Profit Margin:** 48.7%, a 100 basis point improvement YoY
**Net Income:** $1.185 billion (YoY decline of 41.31%, QoQ decline of 31.54%)
**EPS (Diluted):** $1.45, down 39.92% YoY
**Cash and Cash Equivalents:** $6.264 billion
Financial Highlights
Revenue and Earnings Performance:
- Total Revenue: $7.166 billion (YoY growth: 6.84%, QoQ growth: 1.72%)
- Gross Profit Margin: 48.7%, a 100 basis point improvement YoY
- Net Income: $1.185 billion (YoY decline of 41.31%, QoQ decline of 31.54%)
- EPS (Diluted): $1.45, down 39.92% YoY
Balance Sheet and Cash Flow:
- Cash and Cash Equivalents: $6.264 billion
- Total Debt: $6.588 billion, resulting in a net debt position of $324 million
- Operating Cash Flow: $925 million, with free cash flow of $544 million
- Dividends Paid: $326 million, with significant share repurchases totaling $1.3 billion
Key Ratios:
- Current Ratio: 2.68, indicating sound liquidity
- Net Profit Margin: 16.5%, showcasing profitability resilience despite challenges
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
7.17B
6.84%
1.72%
Gross Profit
3.50B
9.11%
4.83%
Operating Income
2.18B
10.57%
6.30%
Net Income
1.19B
-41.31%
-31.54%
EPS
1.46
-39.92%
-30.81%
Key Financial Ratios
currentRatio
2.68
grossProfitMargin
48.8%
operatingProfitMargin
30.4%
netProfitMargin
16.5%
returnOnAssets
3.55%
returnOnEquity
6.36%
debtEquityRatio
0.35
operatingCashFlowPerShare
$1.14
freeCashFlowPerShare
$0.67
dividendPayoutRatio
27.5%
priceToBookRatio
7.63
priceEarningsRatio
29.98
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Market Trends and Insights:
- CEO Gary Dickerson emphasized: "The major technology trends reshaping the global economy are made possible by advanced semiconductors, underpinning long-term secular growth for the industry and especially Applied Materials."
- On AI demand: "AI remains central to our outlook. With early deployment supporting approximately 20% YoY growth in global semiconductor sales in 2024, we anticipate the market will exceed $1 trillion by 2030."
- CFO Brice Hill indicated that Applied is positioned "to grow our share at the leading edge, and we are increasing our capital investments to be the leader in high-velocity co-innovation with our customers."
"In our first fiscal quarter of 2025, Applied Materials delivered record revenues surpassing the prior high we set last quarter."
â Gary Dickerson, CEO
"We are confident in our growth opportunities across all of our business segments, making significant investments in R&D to grow our share at the leading edge."
â Brice Hill, CFO
Forward Guidance
Management projects a revenue decrease to $7.1 billion in the next quarter, primarily due to continued impacts of export restrictions on China, which is expected to account for 5% less of total revenue compared to Q1. However, they remain optimistic about a return to growth for Applied Global Services (AGS) by Q3, estimating a low double-digit annualized growth rate for AGS moving forward as investments in leading-edge foundry logic accelerate, juxtaposed against expected declines in some memory sectors.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
AMAT Focus
48.79%
30.40%
6.36%
29.98%
KLAC
59.60%
39.40%
26.60%
27.46%
ASML
54.00%
35.40%
13.50%
25.24%
ACLS
46.10%
15.10%
2.78%
14.02%
TER
60.60%
17.60%
2.67%
33.72%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Despite certain short-term challenges posed by export restrictions and market fluctuations, Applied Materials Inc exhibits strong growth potential driven by its leadership in advanced semiconductor technologies. With substantial investments in R&D and a diversified product line, the company is well-equipped to capitalize on the growing demand from AI and next-generation tech. Investors should monitor potential recovery in AGS and broader trends in semiconductor investment, while remaining cautious of geopolitical risks and regulatory changes.
Key Investment Factors
Growth Potential
Strong demand for AI and semiconductor technologies offers significant growth opportunities. Management's focus on leading-edge technologies and innovative solutions positions Applied Materials favorably for future market expansion.
Profitability Risk
Dependence on the cyclical semiconductor market and regulatory changes, especially regarding interactions with China, pose risks. The anticipated challenge of approximately $400 million in revenue from export restrictions could impact short-term performance.
Financial Position
Applied Materials maintains a robust financial position with a solid balance sheet, liquidity, and strong cash flow from operations. The company successfully executed significant share repurchase programs while managing its debts effectively.
SWOT Analysis
Strengths
Strong market position in semiconductor equipment manufacturing with record revenues in Q1 2025.
Diverse portfolio across semiconductor systems, services, and display segments enabling resilience against market volatility.
Leadership in advanced semiconductor technologies, particularly in AI and next-generation device architectures.
Weaknesses
Recent decline in net income and EPS reflecting external market headwinds and regulatory challenges, particularly related to China.
Potential future impacts from ongoing technological regulations and changing demand in memory products.
Opportunities
Growing global semiconductor market driven by artificial intelligence and machine learning trends, with significant expansion predicted through to 2030.
Strategic investments in research and development to capture innovations in advanced memory architectures, packaging, and materials engineering.
Threats
Increased competition from domestic and international firms, particularly in emerging semiconductor markets.
Regulatory and export control risks, particularly with Chinese market access impacting revenue streams.