Applied Materials, Inc. (NASDAQ:AMAT) stock fell 2.49% (As on May 19, 11:51:42 AM UTC-4, Source: Google Finance) after the company forecast third-quarter revenue above market estimates, as chipmakers expand production plans to meet a global shortage felt by electronics and auto manufacturers. Chipmakers are increasing their production efforts in response to a worldwide shortage that is impacting electronics and auto manufacturers. Despite a slowdown in consumer-driven markets like PCs and smartphones, Applied Materials is experiencing a boost in demand from the artificial intelligence and automotive sectors, which is helping to offset the sluggish economy. Sales in the semiconductor systems segment climbed to $4.98 billion from $4.46 billion in the 2022 quarter, while applied global services rose to $1.43 billion from $1.38 billion. Display and adjacent markets revenue dropped to $168 million from $381 million last year.

AMAT in the second quarter of FY 23 has reported the adjusted earnings per share of $2, beating the analysts’ estimates for the adjusted earnings per share of $1.84, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 6.2 percent to $6.63 billion in the second quarter of FY 23, beating the analysts’ estimates for revenue of $6.38 billion. On a non-GAAP adjusted basis, the company reported gross margin of 46.8 percent and operating income of $1.93 billion or 29.1 percent of net sales. The company generated $2.29 billion in cash from operations and returned $1.02 billion to shareholders including $800 million in share repurchases and $219 million in dividends.

Additionally, the company has approved a 23.1-percent increase in the quarterly cash dividend from $0.26 to $0.32 per share. The dividend is payable on June 15, 2023 to shareholders of record as of May 25, 2023. The Board also approved a new share repurchase authorization enabling Applied to buyback an additional $10 billion of its shares over time. This supplements the previous authorization which had $4.7 billion remaining at the end of the first quarter of fiscal 2023.

Applied Materials forecast third-quarter revenue of $6.15 billion, plus or minus $400 million, compared with analysts’ estimates of $6.02 billion, according to Refinitiv IBES data. Within the guidance, Applied Materials forecasts semiconductor systems revenue of around $4.5 billion, down 5% year-on-year, $1.43 billion of applied global services sales and display revenue of about $170 million. The company also expects adjusted earnings to be in a range of $1.56 to $1.92 per share for the July quarter, while the Street is looking for $1.68.