Applied Materials forecasts upbeat results on AI demand, memory shortage

By Arsheeya Bajwa Feb 12 (Reuters) – Applied Materials forecast second-quarter revenue and profit above market estimates on Thursday, betting on a boom in demand for AI processors and a worldwide memory shortage to help drive sales of its chipmaking equipment. The rapid build-out of artificial intelligence infrastructure — a major driver for Applied — has absorbed much of the world's memory chip supply, boosting production capacity, and further helping the company's sales. The company's shares rose over 12% in extended trading. Shares of peers Lam Research and KLA rose nearly 3% each after the bell, as Applied's upbeat outlook lifted sentiment. Applied Materials expects second-quarter sales of about $7.65 billion, plus or minus $500 million, compared with estimates of $7.01 billion, according to data compiled by LSEG. The results were "fueled by the acceleration of industry investments in AI computing," CEO Gary Dickerson said in a statement. "The need for higher performance and more energy-efficient chips is driving high growth rates for leading-edge logic, high-bandwidth memory and advanced packaging." The largest U.S. semiconductor equipment maker forecast second-quarter adjusted profit of about $2.64 per share, plus or minus 20 cents, compared with estimates of $2.28. "Memory and logic-foundry capex growth are two sides of the same coin. They are both growing significantly – with memory a greater growth driver near-term," said Timm Schulze-Melander, a Rothschild & Co. Redburn analyst. Logic generally refers to a type of chip that is capable of serving as the brains of a system, such as graphics processors and central processing units. MEMORY IN FOCUS High-bandwidth memory (HBM), made by stacking layers of dynamic random access memory (DRAM) on top of each other, refers to a type of advanced memory chip used alongside pricey AI processors such as those sold by Nvidia. Applied expects DRAM to be its fastest growing segment in 2026, coupled with 3D chiplet stacking — a technique used extensively in producing AI processors — Dickerson said during a post-earnings call. The company reported first-quarter revenue of $7.01 billion, beating estimates of $6.87 billion. Revenue for the quarter ended January 25 included record DRAM sales on a year-on-year basis, finance chief Brice Hill said during the call. The company reported first-quarter profit of $2.38 per share, excluding items. Analysts had expected $2.20 per share. (Reporting by Arsheeya Bajwa in Bengaluru; Editing by Alan Barona and Sriraj Kalluvila)

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