Applied Materials (AMAT 45.19, +1.29) has spiked 2.9% after beating bottom-line expectations and issuing above-consensus guidance for the third quarter.
The semiconductor equipment company reported above-consensus second quarter earnings of $0.79 per share on a 44.7% year-over-year spike in revenue to $3.55 billion, which was just ahead of expectations.
The company's solid quarter represented the fourth consecutive earnings record, driven by above-market growth and an expanding market share.
Margins improved significantly with gross margin jumping 360 basis points to 46.3% while operating margin rose 860 basis points to 27.8%.
Looking at the segment breakdown, Semiconductor Systems net sales rose 51.5% year-over-year to $2.40 billion. Foundry sales made up 41.0% of the total (30.0% one year ago) while DRAM sales accounted for 19.0% of the total (20.0% one year ago) and Flash sales represented 33.0% of the total (42.0% one year ago). Logic and other sales represented 7.0% of segment revenue (8.0% one year ago). Segment operating income surged 108.3% to $854 million and operating margin improved to 35.5% from 25.8%.
Applied Global Services net sales increased 14.4% year-over-year to $724 million. Segment operating income increased 18.2% to $195 million while operating margin improved to 26.9% from 26.1% one year ago.
Display and Adjacent Markets net sales spiked 109.1% to $391 million. Segment operating income grew 171.0% to $84 million while operating margin improved to 21.5% from 16.6%.
Looking ahead, the company expects that third quarter earnings will be between $0.79 and $0.87 per share, which is well ahead of market expectations. Similarly, revenue is also expected to surpass expectations, coming in between $3.60 billion and $3.75 billion.