Applied Materials shares sink 10% on light forecast amid macroeconomic uncertainties

Shares of Applied Materials plummeted over 10% during after-hours trading on Thursday, driven by a disappointing forecast for the upcoming quarter. The semiconductor equipment manufacturer revealed that it anticipates adjusted earnings of $2.11 per share, falling short of analysts' expectations of $2.39 per share, according to LSEG consensus estimates. In addition, the company projects quarterly revenue of $6.7 billion, significantly lower than the estimated $7.34 billion. CEO Gary Dickerson expressed concerns over the prevailing macroeconomic environment, stating that it is generating heightened uncertainty and reduced visibility for the company's future. He specifically noted that the business operations in China are facing substantial challenges due to these uncertainties. The potential impact of tariffs imposed by the Trump administration could lead to a doubling of import costs for chips, unless companies commit to manufacturing them in the U.S. Applied Materials, which produces essential tools for semiconductor fabrication, primarily operates in Asia for its manufacturing. The finance chief of Applied Materials indicated that the company expects a revenue decline in the fourth quarter, citing a slowdown in demand in China and unpredictable purchasing behaviors from leading customers. In its recent third-quarter results, Applied Materials reported a net income of $1.78 billion, or $2.22 per diluted share, compared to $1.71 billion or $2.05 per share from the previous year. Notably, the semiconductor systems division generated $5.43 billion in sales, exceeding estimates and showing a 10% increase year-over-year. Earlier this month, the company received commendation from President Donald Trump for its involvement in an Apple initiative aimed at boosting U.S. chip manufacturing, with plans to collaborate on new manufacturing equipment in Austin, Texas.