Applied Materials, Inc. (NASDAQ:AMAT) shares tanked in morning trading on Friday, even after the company reported upbeat fiscal fourth-quarter earnings.

The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.

Needham On Applied Materials

Analyst Charles Shi maintained a Buy rating while reducing the price target from $240 to $225.

Applied Materials reported a "solid" beat for revenue and earnings, Shi said in a note. Following an unexpected decline in the previous quarter, the company's China revenues came in roughly flat at around $2.14 billion, "but still a meaningful step down" from the average run rate of $2.9 billion per quarter between the fourth quarter of 2023 to the second quarter of 2024, he added.

Management's forward guidance was underwhelming, indicating sequential growth of merely 1.5% in the fiscal first quarter, versus Street expectations of 4.5% growth, the analyst stated. "Over the longer term, management sees that WFE (wafer fabrication equipment) intensity, propped up by the strong China demand of 18% in 2023, could decline and normalize to around 15%," he further wrote.

Goldman Sachs On Applied Materials

Analyst Toshiya Hari reiterated a Buy rating while raising the price target from $228 to $230.

Applied Materials reported quarterly revenues of $7.05 billion, beating consensus by 1%, and non-GAAP gross margin of 47.5%, exceeding guidance by 10 basis points (bps), Hari said. Non-GAAP earnings came in at $2.32 per share, 6% higher than Street expectations, he added.

The company guided to fiscal first-quarter revenues to $7.15 billion, non-GAAP gross margins of 48.4% and non-GAAP earnings of $2.29 per share, the analyst stated. He notes the positives as the ongoing acceleration in Services revenue growth, healthy gross margin trajectory and consistent free cash flow generation.

JPMorgan On Applied Materials

Analyst Harlan Sur reaffirmed an Overweight rating while cutting the price target from $250 to $240.

Applied Materials reported strong quarterly results, driven by robust demand in advanced foundry/logic and DRAM/HBM as well as sustained strength in Services, Sur said. Revenues from China as a percentage of the sales mix declined to 30%, from 32% in previous quarter and 40% before that, he added.

Although the company's revenue growth projections came in slightly below consensus, they reflect "sustained strong spending in advanced foundry/logic, DRAM, growth in new technology inflections, and NAND uptick," the analyst stated. Spending declines in China indicate that Applied Materials' WFE growth in 2025 could be "at a slower lower pace versus prior expectation," he further wrote.

Check out other analyst stock ratings.

Stifel On Applied Materials

Analyst Brian Chin reiterated a Buy rating and price target of $250.

Applied Materials' revenues grew 4% sequentially, beating consensus estimates, driven by "strength in semi systems and service/spares," Chin said. The company's first-quarter revenue and earnings guidance at the midpoint came in $7.15 billion and $2.29 per share, versus consensus of $7.24 billion and $2.27 per share, respectively, added.

Applied Materials said its performance in China could remain flat in the fiscal first quarter, the analyst stated. "Beyond that, management provided limited visibility aside from suggesting investment here could slow given some mixed signals/indicators across ICAPS markets," he further wrote.

Cantor Fitzgerald On Applied Materials

Analyst C.J. Muse maintained an Overweight rating and price target of $250.

Applied Material's gross margins were "a clear bright spot" in the quarterly earnings release, Muse said. Management suggested 48.0% gross margins "as the new underlying rate given focused improvements it has made across the business," he added.

"Commentary on WFE was limited though it is fairly clear that mgmt. expects WFE to grow in 2025 — though obviously the magnitude is uncertain," the analyst wrote. The Trump administration coming into power could be a "near-term overhang for the group," he further stated.

KeyBanc Capital Markets On Applied Materials

Analyst Steve Barger reaffirmed a Sector Weight rating on the stock.

Applied Materials reported quarterly revenues and earnings ahead of consensus by 1% and 6%, respectively, Barger said. In the first-quarter guidance, earnings were 1% above the midpoint, while revenue was 1% below, he added.

"We think there were few surprises on the call with commentary that included an expectation for WFE growth in CY25 on accelerating industry trends, WFE intensity that could decrease over time, although staying in the mid-teens % range, and the common view that the industry will trend toward $1T in semiconductor sales by 2030," the analyst wrote.

AMAT Price Action: Shares of Applied Materials had declined by 8.54% to $170.17 at the time of publication on Friday.

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Photo: Courtesy of Applied Materials.

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