Lam Research's lead lifts Applied Materials
Shares of Applied Materials soared by 15% on Thursday, July 30, reaching a closing price of $501.77. This surge occurred without the company issuing new information. The stock continued to rise slightly on Friday as well.
The recent stock movement was spurred by a standout performance from rival company Lam Research. On Wednesday, Lam shared impressive June-quarter results, including record revenue, operating margin, and earnings per share. It also predicted $8.1 billion in revenue for the September quarter. This strong showing led investors to increase their positions in equipment stocks broadly. Applied Materials, which had already risen more than 200% from its 52-week low of $154.47, joined in on the upward trend.
Applied's May report hinted at optimism
In May, Applied Materials published its fiscal second-quarter results, which were notable. Revenue increased by 11% compared to the previous year, hitting $7.91 billion. Additionally, adjusted earnings per share improved by 20% to $2.86.
The company's leadership estimated that fiscal third-quarter revenue would come in around $8.95 billion, with a potential variance of $500 million. This projection, if met, would again be a record. Moreover, Applied Materials raised its quarterly dividend by 15% to $0.53 per share, which now marks the ninth consecutive year of an increase.
Gary Dickerson, the CEO, noted at that time that the company anticipates over 30% growth in its semiconductor equipment business in 2026. He attributed this optimism to the ongoing AI expansion and the company's focus on advanced technologies like leading-edge logic, DRAM, and advanced packaging.
The Aug. 13 test: Will results match the optimism?
The report scheduled for August 13 carries two main expectations. First, it must achieve the revenue target of $9 billion. Second, it must demonstrate demand robust enough to support the forecasted 30% growth in 2026.
Until this report is released, the recent jump in Applied Materials' stock price is based on expectations rather than actual results. The AI-driven spending wave that propelled Lam Research is likely to positively impact the entire equipment sector.
However, the true validation of this stock movement will happen within the next two weeks when Applied Materials reveals its own results, which will either support or challenge the current market momentum.