What Did Applied Materials's Quarter Signal for Semitechnology?

Applied Materials (NASDAQ:AMAT) gave up some of its pre-earnings gain when it issued guidance that is below consensus. Although short-term challenges remain, the diversified semi-technology company is one of the best companies for value investors.

Applied reported revenue falling 11% in the first quarter. Q2 revenue will be as low as $3.33 billion while EPS may be $0.62 - $0.70. Analysts expected an EPS of $0.77. Display and Adjacent Markets is still above the consensus forecast while the semiconductor systems unit is on par with expectations in Q2.

Company’s Guidance Positive for Industry

AMAT stock may recover in the weeks ahead as investors realize the outlook is not that bad. Demand for memory is improving in the second half of the year. Nvidia (NASDAQ:NVDA), AMD (NASDAQ:AMD), and Micron (NASDAQ:MU) all said the same thing. This suggests the entry point in AMAT stock is near.

2H Recovery

Applied noticed NAND inventories are falling from excess levels seen in the fall. The quicker than expected supply correction signals all semi-conductor stocks could also recover in the second half of this year. AMAT and others who cut spending and lowered operating costs will do best.
5G, IoT, cloud data center, and automotive applications continue to be positive growth drivers for Applied in the coming years. 2019 could be the slow year but growth in 2020 is likely as customers renew spending.