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By Sabela Ojea

Applied Materials logged higher revenue and profit in the fiscal third quarter, but shares fell on a lower-than-expected sales outlook for the first quarter on weaker demand trends in China.

Shares for the Santa Clara, Calif., semiconductor-equipment company fell 5.6%, to $175.65. The stock was up about 15% year to date ahead of the market close.

Overall for the first quarter, Applied Materials expects revenue of $7.15 billion, plus or minus $400 million, and adjusted earnings of $2.29, plus or minus 18 cents. Wall Street forecasts revenue of $7.24 billion and adjusted earnings of $2.27.

The company said China sales are expected to represent 30% of its total topline performance in the first quarter, unchanged from the fourth quarter, and down from 32% in the third quarter.

"We think that's a normalized rate," Finance Chief Brice Hill said on a call with analysts. "It was elevated for a few quarters, even up into the mid-40s, and that was because we were shipping that DRAM demand to some specific China customers when it was allowed."

Applied Materials forecasts revenue growth of between 8% and 12% across its core semiconductor-systems business and its applied global-services segment, respectively, but also a 28% drop in display revenue due to sales headwinds in China.

Still, Chief Executive Gary Dickerson said the company is well positioned to benefit from the boom in AI and energy-efficient computing.

"The biggest tectonic shift is AI," Dickerson said. "We are going to experience the biggest technology changes of our lifetimes with major advances in automation and robotics, electric and autonomous transportation, clean energy and artificial intelligence."

Applied Materials' commentary around the state of the semiconductor industry comes as it posts a fourth-quarter profit of $1.73 billion, or $2.09 a share, compared with $2 billion, or $2.38 a share, for the same period a year earlier.

Stripping out one-time items, the company's earnings per share came in at $2.32. Analysts polled by FactSet had forecast adjusted per-share earnings of $2.19.

Revenue rose 4.8%, to $7.05 billion, beating the $6.96 billion expected by Wall Street, according to FactSet. The company's semiconductor-systems unit posted revenue growth of 6%, to $5.18 billion, and sales at the global-services segment jumped 11%, to $1.64 billion.

Applied Materials' display-and-adjacent-markets unit saw a 29% decline in revenue, to $211 million, in line with management expectations. The industry experienced lower investment levels amidst continuing weakness in end-market demand, Hill said.

Write to Sabela Ojea at sabela.ojea@wsj.com

Applied Materials (AMAT) reported $7.05 billion in revenue for the quarter ended October 2024, representing a year-over-year increase of 4.8%. EPS of $2.32 for the same period compares to $2.12 a year ago.

The reported revenue compares to the Zacks Consensus Estimate of $6.94 billion, representing a surprise of +1.52%. The company delivered an EPS surprise of +6.42%, with the consensus EPS estimate being $2.18.

While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health.

Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance.

Here is how Applied Materials performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:

• Net Sales- Corporate and Other: $18 million compared to the $25.74 million average estimate based on four analysts. The reported number represents a change of -74.7% year over year.
• Net Sales- Semiconductor Systems: $5.18 billion compared to the $5.11 billion average estimate based on four analysts. The reported number represents a change of +6% year over year.
• Net Sales- Display and Adjacent Markets: $211 million versus the four-analyst average estimate of $200.21 million. The reported number represents a year-over-year change of -29.2%.
• Net Sales- Applied Global Services: $1.64 billion versus the four-analyst average estimate of $1.61 billion. The reported number represents a year-over-year change of +11.4%.

View all Key Company Metrics for Applied Materials here>>>

Shares of Applied Materials have returned -1% over the past month versus the Zacks S&P 500 composite's +3.1% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term.

Zacks Investment Research

Billionaire investor Warren Buffett cut several of Berkshire Hathaway Inc‘s (NYSE:BRK) (NYSE:BRK) largest holdings this year.

The Omaha, Nebraska-based holding company’s latest 13F filing shows that the sell-off trend continues.

What Happened: Berkshire’s latest 13F filing, filed on Thursday, reflects the company’s largest holdings as of September 30.

Buffett reduced his stake in Apple Inc. from 400 million to 300 million shares. Thus, Berkshire has now cut its position in the Cupertino, California-based tech giant by over two-thirds since 2023’s third quarter.

The Omaha “oracle” also continued to cut his stake in Bank of America Corp , trimming back another 23% of Berkshire’s position.

Berkshire cut nearly all of its position in Ulta Beauty Inc . Buffett revealed a position in the cosmetic store chain in August; the company’s stock has performed roughly even since then. Buffett’s Ulta holding period was unusually short for the famed value investor.

Meanwhile, Buffett added a couple of fresh faces to Berkshire’s portfolio.

Buffett bought 1,277,256 shares of Ann Arbor, Michigan-based pizza chain Domino’s Pizza Inc . He also made a foray into pool equipment, buying 404,057 shares of Pool Corp .

Price Action: Investors quickly reacted to Berkshire’s 13F filing after hours:

• Dominoes Pizza shares traded up nearly 7%.
• Pool Corp shares traded up nearly 6%.
• Ulta Beauty shares fell over 4%.
• Apple and Bank of America shed insignificant portions of their market value.

Why it Matters: During Berkshire’s annual shareholder meeting in May, Buffett hinted that his sell-offs were a result of tax implications.

This has not stopped investors’ conjecture that Buffett is perhaps bearish on the market at large.

Alternatively, Buffett could be simply trimming positions that take up an outsized portion of Berkshire’s portfolio to reduce exposure.

Also Read:

• Trump Plans To Erase EV Tax Credit: Tesla Analyst Says It’s ‘Net Bullish,’ Calls Sell-Off ‘Wrong Knee-Jerk Reaction’

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