Markets
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Luke Kawa

Applied Materials dips despite posting modest beats on Q4 sales, EPS as restrictions on sales to China weigh on performance

Solid Q4 results and a slightly better-than-anticipated outlook from Applied Materials still aren’t inspiring investors in premarket trading, with the stock down 4.8% as of 4:40 a.m. ET.

For the three months ended October 26, the firm reported:

  • Revenue: $6.8 billion (compared to analyst estimates of $6.67 billion and guidance for $6.2 billion to $7.2 billion)

  • Adjusted earnings per share: $2.17 (estimate: $2.11, guidance: $1.91 to $2.21)

Q1 guidance was also modestly ahead of estimates, as management pointed to sales of about $6.85 billion (plus or minus $500 million) with adjusted earnings per share of $2.18 (plus or minus $0.05). The consensus estimates for these figures were $6.81 billion and $2.15, respectively.

The company is preparing to meet a bigger pickup in demand by the middle of next year.

“Based on our conversations with our customers and partners, we are preparing Applied’s operations and service organizations to be ready to support higher demand beginning in the second half of calendar 2026,” Chief Financial Officer Brice Hill said.

Applied Materials was up more than 35% year to date heading into this report. That being said, it’s thoroughly lagged peers KLA Corp and Lam Research in the semi wafer fab equipment space, with the bulk of that underperformance coming after its Q3 earnings report in mid-August included underwhelming guidance for these Q4 results.

The entire space has come under scrutiny for its business with China, but Applied Materials has had the worst go of it: in early October, management flagged a $600 million hit to fiscal 2026 sales because of export restrictions.

“In 2026, we expect wafer fab equipment spending in China to be lower, and we are not anticipating significant changes to market restrictions,” CEO Gary Dickerson said on the conference call following earnings, noting that the share of China’s wafer fab equipment market the firm couldn’t sell to rose to “well over 20%” in late 2024 and early 2025 due to export restrictions, up from 10% early last year.

Needham analyst Charles Shi flagged how export restrictions shifted Applied Materials’ ability to meet demand from other customers, which helped Q4 sales while hurting its Q1 outlook:

“We believe the stock was down in after hours as the buy side bogey for F1Q26 was as high as $7.1B, partially due to buy side viewing the $110MM China revenue in F4Q25 and some of the $600MM China revenue in FY26, which were thought to be lost due to recent BIS 50% affiliate rule, should be added back as the US later suspended the rule for one year. Management clarified that some ex-China revenue were pulled into October when the BIS rule was first announced in late September, and it is the reason why AMAT actually beat the original F4Q25 guidance (which it gets no credit for), and AMAT did not guide a higher number for F1Q26 (which ends up hurting the stock).”

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Toby Bochan, Luke Kawa
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Markets end the week in the red as Broadcom and Oracle concerns drag the entire AI trade down

The S&P 500, Nasdaq 100, and Russell 2000 were all negative on Friday.

The lunchbox
markets
Matt Phillips

Data center trade deep in the red

The data center trade is seeing its steepest sell-off since the market rout that was ignited by President Donald Trump’s Rose Garden tariff announcement back in April.

Goldman Sachs’ themed basket of AI data center shares was down more than 6% at around 12 p.m. ET, putting it on track for its worst day since the tariff announcement.

Losses hammered seemingly every form of input needed for the sprawling concrete server warehouses at the heart of the investment boom.

Hardware makers including data storage companies like Sandisk, Western Digital, and Seagate Technology Holdings, as well as DRAM maker Micron — some of the best-performing stocks in the S&P 500 this year — were taking a licking, as were networking stocks Cisco and Arista Networks and data center builders such as Vertiv Holdings and electrical and mechanical contractor Emcor.

Optimism for all things AI has seemed to evaporate throughout the week, as the stock market greeted lackluster quarterly numbers from Oracle and Broadcom with jittery sell-offs and concern about growing debts that could crater cash flows.

Those worries seem to be spreading to ancillary beneficiaries of the AI boom on Friday, gouging a chunk out of charts that retail dip buyers have not — at least so far — stepped in to buy as we head into the weekend.

markets
Luke Kawa

Oracle denies Bloomberg report that it’s delaying some data centers for OpenAI to 2028 from 2027

Getting a multi-hundred-billion-dollar backlog for cloud computing revenues from data center projects is easy. Building them is hard.

Oracle extended declines to as much as -6.5% on the day on the heels of a Bloomberg report that the cloud giant has pushed back the completion dates for some of the data centers it’s building for OpenAI to 2028 from 2027, citing people familiar with the work. Oracle denied this report, telling Reuters that there have been no delays to any sites required to meet its contractual commitments and that all milestones remain on track.

Shares had fully pared their report-induced drop ahead of Oracle’s reply, but remain in the red for the day.

Bloomberg said the reported postponement was attributed to labor and material shortages.

Oracle has been spending more on capex than Wall Street had anticipated, leading to higher-than-expected cash burn. Management boosted its full-year capital spending plans by $15 billion after reporting Q2 results earlier this week.

Oracle’s cloud infrastructure sales came in short of estimates in its fiscal 2026 Q2, a signal that markets already had reason to doubt its ability to quickly turn its humungous RPO (that is, remaining purchase obligations) into revenues.

Traders also seem to be of the mind that potential delays to data center completions are going to limit sales for what goes into them.

Some of the bigger losers since the Bloomberg headline hit the wires include:

markets
Luke Kawa

Broadcom’s post-earnings tumble is weighing on Google’s entire AI ecosystem

Broadcom’s post-earnings plunge is prompting a sharp pullback in Google-linked AI stocks, which had been on fire thanks to the warm reception to Gemini 3.

The stocks getting hit hard:

A basket of these Google-linked AI stocks compiled by Morgan Stanley is suffering one of its worst losses of the year. This brisk retreat also follows the release of GPT-5.2 by OpenAI.

markets
Matt Phillips

Citi initiates coverage of Planet Labs with “buy” rating

Planet Labs was up after aerospace and defense analysts at Citi initiated coverage with a “buy/high risk” rating and $19 price target.

The stock is up more than 40% this week, after a strong earnings result that spotlighted the company’s growing opportunity in linking its core business of capturing daily images of the planet with AI technologies.

Citi analysts noted the potential for a positive flywheel effect for Planet Labs as it deepens its focus on integrating AI into its offerings:

“AI is accelerating the conversion of pixels to decisions, where Planet’s daily scan and deep archive offer a uniquely large training corpus and broad-area foundation for automation. AI-enabled solutions (MDA/GMS/AMS) are gaining traction with customers such as NATO and the U.S. DoW, validating the approach of integrating AI into broad-area monitoring products... These AI moves create a compounding advantage: more coverage generates more training data, which improves models, which in turn increases product utility and addressable demand.”

The stock has also caught the attention of some of the retail trading crowd, with call options activity spiking on Thursday as traders rode the market reaction to the results.

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