Applied Materials Q3 Earnings Beat Estimates, Revenues Rise Y/Y

Applied Materials Inc. AMAT reported third-quarter fiscal 2025 non-GAAP earnings of $2.48 per share, which beat the Zacks Consensus Estimate by 5.1%. The company reported earnings of $2.12 per share a year ago.

AMAT reported revenues of $7.3 billion for the quarter ended June 2025, missing the Zacks Consensus Estimate by 1.4%. This top line increased from the year-ago quarter’s $6.78 billion.

AMAT shares have gained 15.5% in year to date period against the Zacks Electronics - Semiconductors industry’s growth of 22.4%.

AMAT’s Segments in Detail

Semiconductor Systems generated revenues of $5.43 billion, contributing 74.3% to total net revenues and marking a 10.2% increase from the year-ago quarter. The figure beat the Zacks Consensus Estimate of $5.38 billion.

Applied Global Services posted revenues of $1.60 billion (21.9% of total net revenues), up 1.3% year over year and above the consensus estimate of $1.57 billion.

Applied Materials, Inc. Price, Consensus and EPS Surprise

Applied Materials, Inc. price-consensus-eps-surprise-chart | Applied Materials, Inc. Quote

Revenues from the Display segment came in at $263 million (3.6% of total net revenues), improving 4.8% from the year-ago quarter and surpassing the consensus estimate of $259 million.

Corporate and Other revenues were $12 million (0.2% of total revenues), down 47.8% from the prior-year period.

Revenues by Geography

Revenues in the United States, Europe, Japan, Korea, Taiwan, Southeast Asia and China were $683 million, $160 million, $713 million, $1.16 billion, $1.843 billion, $195 million and $2.548 billion, contributing 9%, 2%, 10%, 16%, 25%, 3% and 35% to net sales, respectively.

Revenues in Japan, Korea, Taiwan, and China increased 28.5%, 5.3%, 60.5%, and 18.4%, respectively, from the year-ago quarter. Revenues in the United States, Europe, and Southeast Asia decreased 35.2%, 52.8%, and 54.4%, respectively.

Operating Results

The non-GAAP gross margin was 48.9%, expanding 150 basis points year over year.

Operating expenses totaled $1.33 billion, up 5.2% from the year-ago quarter, while contracting 30 basis points as a percentage of sales to 18.1%.

The non-GAAP operating margin stood at 30.7%, up 190 basis points year over year.

Balance Sheet & Cash Flow of AMAT

As of July 27, 2025, cash and cash equivalents plus short-term investments were $7.01 billion, down from $9.47 billion as of April 27, 2025.

Inventories were $5.81 billion in the fiscal third quarter compared with $5.66 billion in the prior quarter. Accounts receivable increased to $5.77 billion from $6.19 billion in the previous quarter.

The long-term debt was $5.46 billion at the end of the quarter, unchanged from the previous quarter.

Applied Materials generated a non-GAAP free cash flow of $2.05 billion, up from $1.06 billion in the prior quarter. The company returned $1.42 billion to shareholders, comprising $1.06 billion in share repurchases and $368 million in dividends.

Guidance

For the fiscal fourth quarter, Applied Materials expects net sales of $6.7 billion (+/- $500 million). The Zacks Consensus Estimate is pegged at $7.31 billion.

Semiconductor Systems, Applied Global Services, and Display sales are anticipated to be $4.70 billion, $1.60 billion, and $350 million, respectively.

Applied Materials expects a non-GAAP gross margin of 48.1% and non-GAAP operating expenses of $1.31 billion. It projects a non-GAAP tax rate of 12.6%.

Management expects non-GAAP earnings per share of $2.11 (+/- $0.20). The Zacks Consensus Estimate is pegged at $2.36.

Zacks Rank & Stocks to Consider

AMAT currently has a Zacks Rank #3 (Hold).

Alkami Technology ALKT, Arista Networks ANET and Amphenol APH are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. While ANET carries a Zacks Rank #2 (Buy), APH and ALKT sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Alkami Technology shares have lost 34.5% year to date. The Zacks Consensus Estimate for Alkami Technology’s full-year 2025 earnings is pegged at 15 cents per share, up by 2 cents over the past 30 days, implying growth of 51.7% from the year-ago quarter’s reported figure.

Arista Networks shares have lost 11.9% year to date. The Zacks Consensus Estimate for ANET’s full-year fiscal 2025 earnings is pegged at 65 cents per share, up by a penny in the past 30 days, indicating year-over-year growth of 13.66%.

Amphenol shares have gained 45.1% year to date. The Zacks Consensus Estimate for Amphenol’s full-year 2025 earnings has been revised upward to $2.69 per share in the past seven days, indicating year-over-year growth of 42.33%.

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