What Happened:
Applied Materials (NASDAQ:AMAT), a company that produces machinery used in semiconductor manufacturing, saw a surge of 5.24% in its stock price during the morning session as a result of Nvidia, their competitor, delivering an outstanding quarter that exceeded analysts’ estimates in several key metrics. Nvidia’s revenue surpassed expectations by 10.3%, largely due to its impressive data center revenue of $4.28 billion. The company’s profitability also exhibited improvement with its gross margin and operating margin both outperforming experts’ expectations. The earnings per share beat expectations by a significant 18.8%. Additionally, inventory levels experienced a meaningful decrease during the quarter. Nvidia’s revenue guidance for the upcoming quarter exceeded expectations by over 50%, and its operating profit guidance surpassed consensus estimates. Nvidia’s founder and CEO, Jensen Huang, emphasized the rapid transformations occurring in the computer industry, particularly in the areas of accelerated computing and generative AI, highlighting Nvidia’s readiness to seize the trillion-dollar shift in global data center infrastructure. This shift is arising as companies integrate generative AI into their business operations. This blowout quarter from Nvidia underscored their strength in the market and Applied Materials, also a semiconductor company, is considered a peer of Nvidia.
What is the market telling us:
The market considers this news as meaningful, but not a fundamental shift in Applied Materials’ business perception. Applied Materials is known for its volatile stock movement with 21 moves greater than 5% over the past year.
In 2023, Applied Materials has seen a rise of 34%, trading at $129.71 per share, close to its 52-week high of $129.92 in May. Investors who purchased $1,000 worth of Applied Materials’ shares five years ago would now have an investment worth $2,550.
To learn more about Applied Materials’ earnings and whether this is a good time to invest in the company, access our free full analysis of the earnings results here.
