(Reuters) -Applied Materials, a semiconductor manufacturing equipment supplier, projected stronger-than-expected first-quarter revenue on Thursday, suggesting that demand for tools used in AI chip production may offset weakness in some parts of the industry. The growing need for advanced memory chips used in artificial intelligence applications is driving increased investment in fabrication equipment and fueling orders for Applied Materials' tools "Based on our conversations with our customers and partners, we are preparing Applied' s operations and service organizations to be ready to support higher demand beginning in the second half of calendar 2026," said Brice Hill, chief financial officer, at Applied Materials. The company forecast current-quarter revenue of $6.85 billion, plus or minus $500 million. Analysts on average expect revenue of $6.76 billion, according to data compiled by LSEG. Excluding one-off items, it forecast profit per share of $2.18, plus or minus 20 cents, higher than estimates of $2.13. However, gross margin in the fourth quarter came in at 48%, slightly below estimates of 48.1%. Shares slipped about 2% in extended trading. Last month, the company forecast a $600 million hit to fiscal 2026 revenue after the U.S. expanded export restrictions, complicating shipments of certain products and services to China-based customers. As chipmakers expand capacity to produce high-bandwidth memory and next-generation semiconductors, the company stands to benefit from rising capital spending across the industry.Its advanced equipment remains in demand from customers including Taiwan Semiconductor Manufacturing Co and Samsung, which use the tools to produce high-performance chips that power data centers and AI applications. The company reported revenue down 3.5% to $6.8 billion for the quarter ended October, versus analysts' average estimate of $6.67 billion, according to data compiled by LSEG. (Reporting by Akash Sriram in Bengaluru; Editing by Tasim Zahid)
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