Applied Materials, Inc.(NASDAQ: AMAT) delivered a strong fiscal 2017 performance with net sales rising 34% to $14.54 billion. They improved their gross margin by 2.9 points to 46.1 percent on a non-GAAP basis while enhanced operating income by 73% to $4.05 billion or 27.9 percent of net sales.
Their process equipment businesses, which offers materials engineering solutions, surged 40% yoy in fiscal 2017. Their inspection and metrology business enhanced over 20%, which is all-time record revenues. Solid performance of their PVD, CMP and thermal products, boosted by growing mass adoption of advanced interconnects in logic as well as increasing use of logic-like processes in memory drove the segment.
The delivered outstanding orders of $16.1 billion and built a backlog of over $6 billion and a book-to-bill ratio of 1.11. The group enhanced their R&D investment by more than $230 million in 2017.
For the first quarter of 2018, they forecast a revenue range of $4.0 billion to $4.2 billion, wherein the midpoint is nearly 25% year-over-year. They forecast their Semiconductor Systems revenue to enhance over 32% year-over-year while services revenue would rise over 17% year-over-year.
The group’s Content is also growing in the data center, while the total cost of ownership of NAND-based solid-state drives is on track to cross over 10K hard disk drives by 2018, enhancing their SSD opportunity to over 35% of the enterprise storage market. Overall, bit demand growth remains strong, in a range of 20% to 25% for DRAM and greater than 40% for NAND.
Going forward, AI and high-performance computing would be a major driver for the 7- and 5-nanometer nodes, indicating a solid target market opportunity to the group. Moreover, rising investment in China is also a positive driver to overall wafer fab equipment. Overall spending in China is over $2 billion higher in 2018 against 2017, while this would increase in the coming years.
Applied Materials stock rose over 1.8% in the after-hours session on November 16th, 2017. The stock delivered over 79.2% in this year to date (as of November 16th, 2017; Source: Google finance).