Applied Materials Stock Falls Despite Strong Earnings

Shares of Applied Material are up 37% this year, outpacing a benchmark semiconductor index. (AFP / Getty Images)

Applied Materials reported better-than-expected results late Thursday, but shares were trading lower in after hours trading.

The chip equipment maker reported adjusted earnings of $2.17 a share for the October quarter, compared with the consensus estimate of $2.11 a share among Wall Street analysts tracked by FactSet. Revenue came in at $6.8 billion, higher than analysts’ expectations for $6.7 billion.

Applied Materials also forecast a range of revenue for the current quarter, which ends in January, with a midpoint of $6.85 billion, above the consensus view of $6.8 billion.

“We are well positioned at the highest value technology inflections in the fastest-growing areas of the market, enabling us to extend our leadership in leading-edge logic, DRAM and advanced packaging as next-generation technologies ramp in volume production over the coming years,” Applied Materials CEO Gary Dickerson said in a press release.

Shares of Applied Materials were down 2.7% in after hours trading Thursday following the report.

Investors may be looking for stronger results given the stock’s recent rally. As of Thursday’s close, Applied Materials has gained 37% this year, compared with a 34% rise for the iShares Semiconductor exchange-traded fund.

The company’s key customers include Intel and Taiwan Semiconductor Manufacturing , or TSMC.

Last month, Applied Materials announced that it was laying off 4% of its workforce. The reduction will position the company for “continued growth as a more competitive and productive organization,” Applied Materials said in a government filing at the time.

Write to Tae Kim at tae.kim@barrons.com