The semiconductor giant offered disappointing current-quarter revenue guidance
Applied Materials, Inc. (NASDAQ:AMAT) stepped into and out of the earnings confessional after last night’s close, where the semiconductor giant reported better-than-expected fiscal fourth-quarter results and a sunny outlook for adjusted earnings per share. The chip stock was last seen 7.9% lower at $171.29, however, after the firm forecasted disappointing fiscal first-quarter revenue guidance, now expecting $7.15 billion — down from the $7.224 billion that analysts anticipated.
The upbeat results were driven by demand for artificial intelligence (AI) chip manufacturing. However, declining sales in China — Applied Material’s second-largest market — weighed on the company’s outlook, especially as the U.S. government continues to restrict sales of semiconducting manufacturing equipment to the country.
AMAT is trading at its lowest level since February, and pacing for its worst weekly drop since October. Shares are now down 15.2% this quarter, but are maintaining a slim 5.7% year-to-date lead. Year over year, Applied Materials stock is up 10.7%.
Analysts are also weighing in. At least 10 price-target cuts have been issued so far, with Susquehanna moving the lowest to $155. There’s room for even more adjustments lower, considering Applied Material stock’s average 12-month target price of $221.77 is a 30.1% premium to its current perch.
Options traders are blasting AMAT from both sides of the aisle following the earnings call. So far, 16,000 calls and 16,000 puts have crossed the tape, which is 8 times the average intraday volume. The most activity is taking place at the November 167.50 put, followed by the 175 put from the same monthly series. Meanwhile, new positions are being bought to open at the November 170 call.