Applied Materials Stock Slips on Predicted China Sales Headwinds

Shares of Applied Materials fell Friday morning after the company’s projections for current quarter sales left room for disappointment.

Applied Materials’ (AMAT) results for the first quarter of fiscal 2025 came in after the bell Thursday, with the company’s reported $7.17 billion in revenue and $2.38 in adjusted earnings per share—each topping estimates.

Despite the estimate-topping quarter, the maker of semiconductor manufacturing equipment said its sales could be negatively impacted by recent limitations on exports. The company said it expects second-quarter revenue of $7.1 billion, roughly in line with the $7.16 billion analyst consensus, though the company set the sales range at $400 million above or below that midpoint.

Applied Materials Predicts Export Limits Will Hurt China Sales

“The ability of U.S. companies to serve the China market is constrained and has been further limited by updated trade rules announced in December and January,” CEO Gary Dickerson said in Thursday’s earnings call. Dickerson said the company expects to face a headwind of about $400 million in sales in fiscal 2025 because of the new rules, according to a transcript of prepared remarks published ahead of the earnings call.

In December, the U.S. government announced new restrictions on the export of semiconductor manufacturing equipment and software, citing possible military and national security concerns.

Sales in China were $2.24 billion in the quarter, nearly a third of the company’s total revenue compared to $3 billion in sales for 45% of revenue the same time last year. China sales also declined last quarter, after analysts had said a slowdown in demand for certain tech hardware products in China could affect Applied Materials and other companies.

Applied Materials shares were down more than 5% Friday morning.