Applied Materials Beats Revenue Estimates, Boosts EPS

Ticker: AMAT · Form: 10-Q · Filed: 2025-08-21T00:00:00.000Z

Sentiment: bullish

Topics: Semiconductor Equipment, Earnings Report, Revenue Growth, Shareholder Returns, Capital Expenditures, Income Taxes, Technology Sector, Financial Performance

Related Tickers: AMAT, ASML, LRCX, TSM, INTC

TL;DR

**AMAT is a buy; strong revenue growth and EPS beat signal robust semiconductor demand despite higher taxes.**

AI Summary

APPLIED MATERIALS INC (AMAT) reported a robust quarter, with net revenue increasing to $7.302 billion for the three months ended July 27, 2025, up 7.7% from $6.778 billion in the prior year period. Net income also saw a positive trend, reaching $1.779 billion, a 4.3% increase from $1.705 billion year-over-year. Diluted earnings per share rose to $2.22 from $2.05. For the nine months ended July 27, 2025, net revenue grew to $21.568 billion, an increase of 7.1% from $20.131 billion, although net income for the nine-month period decreased to $5.101 billion from $5.446 billion, primarily due to a significantly higher provision for income taxes, which jumped to $1.903 billion from $811 million. The company continued its share repurchase program, buying back $4.036 billion of common stock over the nine months, and paid $1.058 billion in dividends. Cash and cash equivalents decreased to $5.384 billion from $8.022 billion since October 27, 2024, largely due to increased capital expenditures of $1.475 billion and substantial share repurchases.

Why It Matters

This filing indicates strong operational performance for Applied Materials, a critical supplier in the semiconductor industry, which is a bellwether for broader tech health. The revenue and EPS growth in the latest quarter suggest resilient demand for chip manufacturing equipment, benefiting investors through increased profitability and continued capital returns via dividends and share repurchases. For employees, this signals stability and potential for growth within a thriving company. Customers can expect continued innovation and capacity from a key partner. In the competitive landscape, AMAT's performance underscores its strong market position against rivals like ASML and Lam Research, potentially leading to further market share gains and influencing industry-wide investment cycles.

Risk Assessment

Risk Level: medium — While revenue and net income for the quarter were strong, the nine-month net income decreased from $5.446 billion to $5.101 billion, primarily due to a significant increase in the provision for income taxes from $811 million to $1.903 billion. Additionally, cash and cash equivalents declined by $2.638 billion from $8.022 billion to $5.384 billion since October 27, 2024, indicating substantial cash outflows for capital expenditures and share repurchases, which could impact liquidity if not managed carefully.

Analyst Insight

Investors should consider holding or initiating a long position in AMAT, given the strong quarterly revenue growth of 7.7% and increased diluted EPS of $2.22. The company's continued share repurchases of $4.036 billion and dividend payments of $1.058 billion demonstrate a commitment to shareholder returns, making it an attractive option for growth and income-oriented portfolios.

Financial Highlights

debt To Equity
N/A
revenue
$7.302B
operating Margin
30.6%
total Assets
$34.211B
total Debt
$6.262B
net Income
$1.779B
eps
$2.22
gross Margin
48.8%
cash Position
$5.384B
revenue Growth
+7.7%

Revenue Breakdown

SegmentRevenueGrowth
Semiconductor Systems$7,302M+7.7%

Key Numbers

Key Players & Entities

FAQ

What were Applied Materials' net revenues for the three months ended July 27, 2025?

Applied Materials reported net revenues of $7.302 billion for the three months ended July 27, 2025. This represents a 7.7% increase compared to $6.778 billion for the same period in the prior year.

How did Applied Materials' net income change for the nine months ended July 27, 2025?

For the nine months ended July 27, 2025, Applied Materials' net income was $5.101 billion, a decrease from $5.446 billion for the nine months ended July 28, 2024. This decline was primarily driven by a higher provision for income taxes.

What was the diluted earnings per share for AMAT in the latest quarter?

The diluted earnings per share for Applied Materials for the three months ended July 27, 2025, was $2.22. This is an increase from $2.05 reported for the three months ended July 28, 2024.

What was the impact of income taxes on Applied Materials' financial results?

The provision for income taxes significantly increased to $1.903 billion for the nine months ended July 27, 2025, compared to $811 million for the same period in the prior year. This substantial increase was a primary factor in the decrease in net income for the nine-month period.

How much did Applied Materials spend on common stock repurchases?

Applied Materials repurchased $4.036 billion of common stock during the nine months ended July 27, 2025. This demonstrates the company's ongoing commitment to returning capital to shareholders.

What were Applied Materials' cash and cash equivalents as of July 27, 2025?

As of July 27, 2025, Applied Materials reported cash and cash equivalents of $5.384 billion. This is a decrease from $8.022 billion reported as of October 27, 2024.

Did Applied Materials increase its capital expenditures?

Yes, capital expenditures for Applied Materials increased to $1.475 billion for the nine months ended July 27, 2025, up from $783 million for the same period in the prior year. This indicates increased investment in property, plant, and equipment.

What is the significance of the increase in gross profit for Applied Materials?

Applied Materials' gross profit for the three months ended July 27, 2025, was $3.562 billion, an increase from $3.205 billion in the prior year. This 11.1% increase indicates improved efficiency in production or favorable pricing, contributing to higher income from operations.

How many shares of common stock were outstanding for Applied Materials as of July 27, 2025?

As of July 27, 2025, the number of shares outstanding of Applied Materials' common stock was 796,642,427. This figure reflects the impact of share repurchases during the period.

What is the outlook for Applied Materials based on this 10-Q filing?

The filing indicates a strong operational outlook for Applied Materials, with significant revenue growth in the latest quarter and year-to-date. Despite higher tax provisions impacting nine-month net income, the core business performance, as evidenced by increased gross profit and income from operations, suggests continued demand for its semiconductor equipment and services.

Risk Factors

Industry Context

Applied Materials operates in the semiconductor capital equipment industry, a sector critical to the production of all electronic devices. The industry is characterized by intense technological innovation, cyclical demand tied to semiconductor cycles, and significant capital investment requirements. Key trends include the growing demand for AI, high-performance computing, and advanced mobile devices, driving investment in leading-edge manufacturing technologies.

Regulatory Implications

The company faces regulatory scrutiny related to international trade policies, export controls, and compliance with varying tax laws across different jurisdictions. Changes in trade relations or increased tariffs could impact global sales and supply chain operations. The significant increase in the provision for income taxes highlights the complexity of navigating global tax regulations.

What Investors Should Do

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Key Dates

Glossary

Provision for income taxes
The amount of tax expense recognized by a company in its financial statements for a given period. (A significant increase in this provision to $1.903 billion in YTD 2025 from $811 million in YTD 2024 directly impacted net income, causing it to decrease despite revenue growth.)
Treasury stock
Stock that a company has repurchased from the open market. (The company's treasury stock increased significantly to ($44.186 billion) from ($40.150 billion), reflecting $4.036 billion in common stock repurchases during the nine months ended July 27, 2025.)
Weighted average number of shares (diluted)
The average number of outstanding shares of common stock, adjusted for the dilutive effect of stock options and other potential common shares. (The diluted weighted average shares decreased from 835 million in YTD 2024 to 811 million in YTD 2025, reflecting the impact of share repurchases on EPS calculations.)
Contract liabilities
Obligations to transfer goods or services to a customer for which the company has received consideration from the customer. (Contract liabilities decreased to $2.470 billion from $2.849 billion, potentially indicating a shift in customer payment timing or project completion.)

Year-Over-Year Comparison

Compared to the prior year period, Applied Materials reported a 7.7% increase in net revenue for the third quarter of 2025, reaching $7.302 billion, and a 4.3% increase in net income to $1.779 billion. However, for the nine months ended July 27, 2025, net income decreased to $5.101 billion from $5.446 billion, primarily due to a substantial increase in the provision for income taxes, which more than doubled from $811 million to $1.903 billion. Total assets remained relatively stable at $34.211 billion, while cash and cash equivalents saw a notable decrease from $8.022 billion to $5.384 billion, driven by significant share repurchases and capital expenditures.

Filing Stats: 4,913 words · 20 min read · ~16 pages · Grade level 17.4 · Accepted 2025-08-21 16:02:16

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

: Financial Statements (Unaudited)

Item 1: Financial Statements (Unaudited) 3 Consolidated Condensed Statements of Operations for the Three an d Nine Months Ended July 27, 2025 and July 28, 2024 3 C onsolidated Condensed Statements of Comprehensive Income for the Three and Nine Months Ended July 27, 2025 and July 28, 2024 4 Consolidated Condensed Balance Sheets as of July 27, 2025 and October 27, 20 24 5 Consolidated Condensed Statements of Stockholders' Equity for the Three and Nine Months Ended Jul y 27, 2025 and July 28, 2024 6 Consolidated Condensed Statements of Cash Flows for the Nine Months Ended July 27, 2025 and July 28, 2024 8 Notes to Consolidated Condensed Financial Statements 9

: Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 27

: Quantitative and Qualitative Disclosures About Market Risk

Item 3: Quantitative and Qualitative Disclosures About Market Risk 39

: Controls and Procedures

Item 4: Controls and Procedures 40

OTHER INFORMATION

PART II. OTHER INFORMATION

: Legal Proceedings

Item 1: Legal Proceedings 41

: Risk Factors

Item 1A: Risk Factors 42

: Unregistered Sales of Equity Securities and Use of Proceeds

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds 57

: Default Upon Senior Securities

Item 3: Default Upon Senior Securities 57

: Mine Safety Disclosures

Item 4: Mine Safety Disclosures 57

: Other Information

Item 5: Other Information 57

: Exhibits

Item 6: Exhibits 58

Signatures

Signatures 59 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements APPLIED MATERIALS, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (In millions, except per share amounts) Three Months Ended Nine Months Ended July 27, 2025 July 28, 2024 July 27, 2025 July 28, 2024 (Unaudited) Net revenue $ 7,302 $ 6,778 $ 21,568 $ 20,131 Cost of products sold 3,740 3,573 11,025 10,569 Gross profit 3,562 3,205 10,543 9,562 Operating expenses: Research, development and engineering 901 836 2,653 2,375 Marketing and selling 224 205 646 621 General and administrative 204 222 667 745 Total operating expenses 1,329 1,263 3,966 3,741 Income from operations 2,233 1,942 6,577 5,821 Interest expense 66 63 198 181 Interest and other income (expense), net 396 81 625 617 Income before income taxes 2,563 1,960 7,004 6,257 Provision for income taxes 784 255 1,903 811 Net income $ 1,779 $ 1,705 $ 5,101 $ 5,446 Earnings per share: Basic $ 2.23 $ 2.06 $ 6.32 $ 6.57 Diluted $ 2.22 $ 2.05 $ 6.29 $ 6.52 Weighted average number of shares: Basic 798 826 807 829 Diluted 802 833 811 835 See accompanying Notes to Consolidated Condensed Financial Statements. 3 Table of Contents APPLIED MATERIALS, INC. CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Three Months Ended Nine Months Ended July 27, 2025 July 28, 2024 July 27, 2025 July 28, 2024 (Unaudited) Net income $ 1,779 $ 1,705 $ 5,101 $ 5,446 Other comprehensive income (loss), net of tax: Change in unrealized gain (loss) on available-for-sale investments 2 18 7 36 Change in unrealized net loss on derivative instruments 40 8 59 44 Change in defined and postretirement benefit plans — — — ( 9 ) Other comprehensive income (loss), net of tax 42 26 66 71 Comprehensive income $ 1,821 $ 1,731 $ 5,167 $ 5,517 See accompanying Notes to Consolidated Condensed Financial Statements. 4 Table of Contents APPLIED MATERIALS, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (In millions) July 27, 2025 October 27, 2024 ASSETS

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