Applied Materials, Inc. (NASDAQ:AMAT) stock rose 8.73% (As on February 16, 11:59:38 AM UTC-4, Source: Google Finance) after the company forecast a better-than-expected second quarter on strong demand from customers looking to make AI-enabled chips. Governments across the world have been urging chipmakers to develop domestic production of semiconductors, to reduce reliance on China and Taiwan amid U.S.-Sino tensions. On a non-GAAP basis, the company reported gross margin of 47.9 percent and operating income of $1.98 billion or 29.5 percent of net revenue. The company has generated $2.33 billion in cash from operations and distributed $966 million to shareholders including $700 million in share repurchases and $266 million in dividends. Further, Applied Materials has maintained a dominant position in major inflections, including foundry-logic, ICAPS, DRAM, and packaging. The company is set to introduce its breakthrough pattern shaping technology, Sculpta, which is expected to drive significant growth. The semiconductor industry is projected to reach a $1 trillion market by 2030, driven by digital transformation and AI.

Moreover, during the quarter, the company had announced an expansion of the long-term partnership with Leti, which is focused on accelerating ICAPS innovation, and the compan launched a new collaboration with MIT, which is centered around next-generation power electronics.

AMAT in the first quarter of FY 24 has reported the adjusted earnings per share of $2.13, beating the analysts’ estimates for the adjusted earnings per share of $1.91. The company had reported the adjusted revenue flat growth to $6.71 billion in the first quarter of FY 24, beating the analysts’ estimates for revenue of $6.47 billion. China sales of $3 billion accounted for 45% of total revenue, up from 17%, a year earlier. The company has reported record equipment sales at $20.7 billion for 2023, with significant DRAM sales of over $4.3 billion.

The California-based company said it expects second-quarter revenue of $6.5 billion, plus or minus $400 million, compared with analysts’ average estimate of $5.92 billion, according to LSEG data. It also forecast adjusted profit per share of $1.79 to $2.15, above estimates of $1.79. Applied Materials, which supplies to Intel and Samsung among others, expects high-bandwidth memory (HBM) packaging revenues to be four times larger than last year.  And across all device types, the company expects revenue from the advanced packaging product portfolio to grow to approximately $1.5 billion. Applied Materials expects semiconductors to grow faster than GDP, with the equipment market growing at a similar or faster pace.