Applied Materials, Inc. (NASDAQ:AMAT) stock fell 8.33% (As on November 15, 11:21:15 AM UTC-4, Source: Google Finance) after the company reported fiscal fourth-quarter results that beat Wall Street estimates, but the memory chip maker’s revenue guidance for the current quarter fell short of estimates. AMAT’s Q1 weak forecast is a sign of sluggish demand for the chipmaking equipment outside of AI-powered chips. Further, stricter export curbs on high-end chips and certain equipment to China from the United States have kept the uncertainty lingering on both tools suppliers and chip firms. Applied also faces competition from other chipmaking equipment suppliers such as KLA Corp, Lam Research and Europe’s ASML Holding. On a non-GAAP basis, the company reported gross margin of 47.5 percent and record operating income of $2.06 billion or 29.3 percent of net revenue. The company generated $2.58 billion in cash from operations and distributed $1.77 billion to shareholders including $1.44 billion in share repurchases and $329 million in dividends.

Moreover, Semiconductor system sales were $5.18 billion for Q4, up 6% year over year, driven by leading-edge foundry-logic demand. Non-GAAP operating margin was 35.4%, down 50 basis points year over year, given the normalizing China mix. DRAM sales declined 10% year over year, given the elevated purchases from China in Q4 of fiscal 2023. NAND sales were flat year over year. Foundry-logic sales increased 12% year over year, fueled by robust growth at the leading edge, including increasing investments for gate-all-around nodes as customers invested to enable critical technology inflections. Applied Global Services delivered record revenue of $1.64 billion in Q4, up 11% on a year-over-year basis and driven by robust growth in services, partially offset by a decline in 200-millimeter equipment sales.

AMAT in the fourth quarter of FY 24 has reported the adjusted earnings per share of $2.32, beating the analysts’ estimates for the adjusted earnings per share of $2.19. The company had reported the adjusted revenue growth of 5 percent to $7.05 billion in the fourth quarter of FY 24, beating the analysts’ estimates for revenue of $6.95 billion. China accounted for 30% of company’s revenue in the quarter, compared with 44% in the same period last year.

The largest U.S. semiconductor equipment maker expects first-quarter revenue of about $7.15 billion, plus or minus $400 million, below analysts’ average estimate of $7.22 billion, according to data compiled by LSEG. It forecast adjusted profit per share of about $2.29, plus or minus $0.18, which was above estimates of $2.27.