Applied Materials Third-Quarter Results Preview

Applied Materials, the chip-equipment maker, is scheduled to report its third-quarter results on Thursday after the market closes. Here's a summary of what you should know:

Net Income

According to FactSet, Applied Materials is expected to report a net income of $1.45 billion for the quarter, which is a decrease from $1.61 billion compared to the same period last year.

Adjusted Earnings

FactSet predicts that the Santa Clara, Calif.-based company will post adjusted earnings of $1.74 per share.

Revenue

The company is expected to report revenue of $6.15 billion for the quarter, down from $6.52 billion in the previous year.

What to Watch

Facilities

One aspect to watch for is Applied Materials' plans regarding its investment of $400 million over four years in a new engineering center in Bangalore, India. The company aims to focus on developing and commercializing new technology for semiconductor manufacturing equipment with this facility. Additionally, Applied Materials has announced its intention to invest up to $4 billion in a new facility in California, which will focus on research for semiconductor tools. This investment is part of a broader trend in the chip industry, fueled by government subsidies.

Backlog

Investors may be interested in any commentary about the state of Applied Materials' backlog. Chief Financial Officer Brice Hill has previously mentioned that the backlog remains elevated due to customers placing orders further ahead in time. He expects the backlog to remain at an elevated level at the end of the year. Additionally, Hill has noted that the company's lead times are normalizing.

Demand

Analysts will be paying attention to any updates on the demand situation. In the previous quarter, Chief Executive Gary Dickerson highlighted weak demand directly driven by consumer electronics. However, he also noted that demand driven by technological advancements and regional supply chain investments remains strong.