What Happened:
Shares of maker of machinery employed in semiconductor manufacturing, Applied Materials (NASDAQ:AMAT) jumped 5.24% in the morning session after competitor, Nvidia, delivered an exceptional quarter that topped analysts' estimates across key metrics. Revenue surpassed expectations by an impressive 10.3%, driven by a record-breaking data center revenue of $4.28 billion. Notably, the company exhibited improved profitability, with both gross margin and operating margin outperforming expectations. Earnings per share beat by an impressive 18.8%. Inventory levels experienced a meaningful decrease during the quarter. In addition to the outstanding quarterly results, the revenue guidance for the next quarter surpassed expectations by over 50%. Similarly, the operating profit guidance exceeded Consensus estimates. Founder and CEO Jensen Huang emphasized the ongoing transformations in the computer industry, particularly the advancements in accelerated computing and generative AI. He highlighted Nvidia's readiness to seize the opportunities presented by the anticipated trillion-dollar shift in global data center infrastructure from general-purpose to accelerated computing, as firms implement generative AI into their business operations. Overall, the company's blowout quarter, with its impressive revenue growth, enhanced profitability, and positive guidance, underscored its strength in the market. Applied Materials is a semiconductor company, and considered a peer of Nvidia.
What is the market telling us:
Applied Materials's shares are very volatile and over the last year have had 21 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
Applied Materials is up 34% since the beginning of the year, and at $129.71 per share it is trading close to its 52-week high of $129.92 from May 2023. Investors who bought $1,000 worth of Applied Materials's shares five years ago would now be looking at an investment worth $2,550.
Is now the time to buy Applied Materials? Access our full analysis of the earnings results here, it's free.