Applied Materials Impresses, but Shares Too Pricey
Although we're raising our fair value estimate on this wide-moat firm to account for stronger expectations, we recommend investors stay on the sidelines for now.
Fiscal third-quarter revenue rose 15% sequentially, to $2.8 billion, as equipment sold to semiconductor manufacturers was up 13%. Foundry orders nearly tripled from the prior quarter, indicating the confidence major foundries have in the upcoming 10-nanometer process that will support the chips that go into future Apple iPhone and Samsung Galaxy devices. Display revenue came in at $313 million, doubling year over year, a benefactor of the transition to OLED. Both gross and operating margins were up sequentially on a richer product mix, to 42% and 21%, respectively.
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