Applied Materials (AMAT) Prepares to Report Q4 Earnings – What To Expect

Applied Materials, Inc. (AMAT) is set to release its Q4 2025 earnings after market close, a crucial moment for markets seeking to gauge the company's resilience amidst a complex landscape of restructuring initiatives, export restrictions, and evolving market demands.

The stock is trading at $223, down 3.25% on the day, indicating some trepidation leading in, after what has been strong year for AMAT bulls, up 36% YTD.

The semiconductor equipment giant faces a mixed bag of factors influencing its near-term performance. Analysts are projecting an EPS of $2.10 for the quarter, a 9.48% decrease from the same quarter last year, signaling potential headwinds.

Adding to the complexity, Applied Materials recently announced a global workforce reduction of approximately 1,400 positions, representing about 4% of its total staff. While this move is intended to enhance productivity and competitiveness through automation and digitalization, it will result in one-time charges between $160 million and $180 million.

However, the company is also grappling with new U.S. export restrictions, limiting its ability to export certain products to specific Chinese customers without a license. Applied Materials projects a revenue reduction of approximately $110 million for the fourth quarter and an estimated $600 million decrease in fiscal 2026 due to these restrictions.

Despite these challenges, AMAT has demonstrated several positive developments recently. CEO Gary Dickerson's purchase of 50,000 shares in April at an average price of $137.30, his first open-market purchase in nearly a decade, signals strong confidence in the company's future.

Furthermore, the company's stock rose in July, driven by increased demand for AI infrastructure, boosting its Logic and DRAM businesses. The Sym3 Magnum etch system, launched in February 2024, has generated over $1.2 billion in revenue, further contributing to this positive momentum.

Moreover, Applied Materials' strategic investment in BE Semiconductor Industries (Besi) to strengthen collaboration in hybrid bonding technology and the announcement of a 15% increase in its quarterly cash dividend, coupled with a new $10 billion share repurchase program, underscore the company's commitment to innovation and returning value to shareholders.

While the consensus seems to be cautiously optimistic, a more critical analysis suggests that the market may be overlooking some significant vulnerabilities. The projected EPS decrease, coupled with the substantial revenue hit from export restrictions, could signal a more profound slowdown than currently anticipated.

The restructuring, while potentially beneficial in the long run, introduces short-term uncertainty and execution risk. Furthermore, relying heavily on AI-driven demand might prove precarious, as the AI sector itself is subject to rapid technological shifts and potential regulatory scrutiny. A more bearish scenario could see AMAT struggling to maintain its growth trajectory, leading to a re-evaluation of its stock price in the coming quarters.

As analysts await the Q4 2025 earnings release, they will be closely monitoring management's commentary on the impact of export restrictions, the progress of restructuring efforts, and the outlook for key end markets.