Applied Materials Inc (NASDAQ:AMAT) Posts Mixed Q3 2025 Results as Weak Guidance Sparks Stock Selloff

Applied Materials Inc (NASDAQ:AMAT) Reports Mixed Q3 2025 Results Amid Market Uncertainty

Applied Materials Inc delivered a mixed performance in its fiscal third quarter, beating analyst expectations on earnings per share (EPS) but falling short on revenue. The company’s outlook for the next quarter disappointed investors, triggering a sharp decline in its stock price.

Key Financial Highlights

• Revenue: $7.30 billion, up 8% year-over-year but below the consensus estimate of $7.37 billion.
• Non-GAAP EPS: $2.48, a 17% increase from the prior year and above the estimated $2.41.
• Gross Margin: 48.9% (non-GAAP), up from 47.4% a year ago.
• Operating Margin: 30.7% (non-GAAP), reflecting improved profitability.

Despite the earnings beat, the market reaction was negative, with shares dropping more than 10% in after-hours trading. The primary driver appears to be Applied Materials’ weaker-than-expected guidance for the fourth quarter.

Outlook vs. Analyst Expectations

The company projected Q4 revenue of approximately $6.7 billion (plus or minus $500 million), significantly below the $7.48 billion analysts had anticipated. Similarly, non-GAAP EPS guidance of $2.11 (plus or minus $0.20) fell short of the $2.43 estimate.

Management attributed the cautious outlook to:

• China Market Uncertainty: Ongoing macroeconomic and policy challenges impacting demand.
• Customer Demand Softness: "Digestion of capacity in China" and "non-linear demand from leading-edge customers."

Market Reaction & Context

The sharp decline in share price reflects investor concerns over slowing growth, particularly in China, which remains a critical market for semiconductor equipment makers. Recent trade tensions and geopolitical risks have added to the uncertainty, as highlighted in broader market news.

Segment Performance

• Semiconductor Systems: Revenue rose 10% YoY to $5.43 billion, driven by strong foundry/logic demand.
• Applied Global Services (AGS): Revenue was flat at $1.6 billion, with operating margins slightly declining.
• Display: Revenue grew modestly to $263 million, but operating margins improved significantly.

Conclusion

While Applied Materials posted solid earnings growth, the weak forward guidance has overshadowed these results. The semiconductor industry remains cyclical, and near-term headwinds—particularly in China—are weighing on sentiment.

For a deeper dive into Applied Materials’ earnings and analyst estimates, visit the earnings page.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research before making any financial decisions.