Applied Materials stock price has soared and moved to the highest level since February 21 as investors wait for the upcoming financial results. AMAT shares also jumped as artificial intelligence (AI) companies did well following Trump’s dealmaking in Saudi Arabia. It was trading at $173, up by over 40% from its lowest level this year.
Trump partnership hopes
Applied Materials and other semiconductor companies like AMD and NVIDIA soared as the market cheered Trump’s Middle East trip. In a statement, AMD and NVIDIA said that they would supply Saudi Arabia’s Humain with chips as the US removed limits on semiconductor shipments to the kingdom.
While Applied Materials does not sell chips directly, the company is a top beneficiary of the semiconductor growth. That’s because it is one of the biggest suppliers of semiconductor manufacturing equipment that help processes like etching, ion implantation, and rapid thermal processing.
Being in these industries has helped Applied Materials substantially in the past few years as semiconductor demand rose. Its annual revenue jumped from over $17 billion in 2020 to over $27 billion in the last financial year.
Applied Materials business is doing well
AMAT has made a lot of progress in the past few years, helped by the substantial sales growth in the AI sector. Its quarterly revenue rose by 7% in the first quarter to a record $7.16 billion. That figure was higher than its previous guidance and what analysts were expecting.
The company also boosted its gross and operating margins even as it increased its research & development. Its gross margin rose from 47.9% in Q1’24 to 48.9% in Q1’25, while the operating margin rose from 29.5% to 30.6%.
Most of its growth came from its semiconductor systems, whose revenue rose by 9% to $5.36 billion. As part of this segment, the foundry-logic revenue rose by 20%, while its NAND revenue jumped by 3%.
The Applied Global Services made $1.5 billion, a 8% increase from the previous year. Most notably, this business makes enough profits to cover its growing dividend.
Most importantly, Applied Materials has been boosting its earnings per share by repurchasing its stock. It has reduced the outstanding shares to 812 million from over 917 million in 2021.
AMAT earnings ahead
The next important catalyst for Applied Materials is its coming financial results, which will provide more information about its growth.
Wall Street analysts are optimistic that the company’s growth continued in the last quarter. The average revenue estimate among analysts is $7.12 billion, up by 7.18% from the same quarter last year.
Analysts expect that the average earnings per share (EPS) rose from $2.09 in Q2’24 to $2.31. They believe that the annual revenue will grow by 5.8% to $28.77 billion, and its annual EPS will be $9.35. Based on its historical performance, odds are that its numbers will be better than expected.
Applied Materials stock price analysis
The daily chart shows that the AMAT share price has staged a strong rally in the past few months. It has rallied from a low of $123.65 in April to a high of $173 today.
The current price is along the 38.2% Fibonacci Retracement level. It has also moved above the 50-day and 200-day Weighted Moving Averages (WMA).
AMAT stock’s Relative Strength Index (RSI) has moved above the overbought level. Other oscillators have continued rising this year.
Therefore, the Applied Materials stock price will likely keep rising as bulls target the next key resistance level at $200, which is about 15% above the current level. A move below the support at $158 will invalidate the bullish outlook.
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