Investopedia: Playing The Applied Materials Rollercoaster

Semiconductor equipment giant Applied Materials (Nasdaq:AMAT) is a frustrating name in many respects. Nobody disputes that AMAT is a leading name in the equipment that companies require to manufacture semiconductor, LEDs, flat panels and solar films. On the other hand, while the company's revenue and cash flow base has chopped upwards, the stock has yet to break out of a ten-year downward trend. That makes this stock a challenging trade-off between quality, valuation and sentiment. 


A Solid Start to the Fiscal Year
At least AMAT is getting this fiscal year off to a decent start. Revenue rose 45% from last year, but dropped about 7% from the prior quarter, and beat the average analyst guess. The underlying revenue mix was a bit more volatile; the company's core semiconductor business was up slightly, while the display and solar businesses fell off sequentially.

Profitability was not bad. Gross margin (on an adjusted basis) stayed sequentially consistent, as did the company's operating margin. That's not given that it is not at all uncommon for companies like Applied Materials to see a sharper falloff in profits on lower sequential revenue.


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