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Applied Materials, Inc.


Wall street consensus:


​Recent Conference Call

### Summary of Applied Materials, Inc. FQ1 2024 Earnings Call

**Insightful Quote from CFO, Brice A. Hill:**
"In data center AI, we are #1 in process equipment for advanced logic and compute memory, both standard DRAM and high-bandwidth memory."

### Key Quarterly Business Trends

1. **Innovations in High-Bandwidth Memory and Gate-All-Around Transistors:** There is a focus on delivering innovations critical for scaling AI, IoT, electric vehicles, and renewable energy. These include transitions to high-volume production of high-bandwidth memory in DRAM and gate-all-around transistors in leading-edge foundry logic, both of which offer significantly improved energy efficiency and performance.

2. **Expansion in ICAPS and Advanced Packaging Sectors:** Applied Materials stresses the importance of its ICAPS market solutions and the expansion in the advanced packaging sector. The company is observing growth opportunities in areas less dependent on shrinking device features, relying more on new structures, materials, and integration approaches.

3. **Market Environment and Customer Investment Reacceleration:** Applied Materials notes an improvement in the overall market dynamics, with reacceleration in capital investment by cloud companies, increasing fab utilization across device types, and normalization of memory inventory levels.

### Critical Questions from Sell-Side Analysts

1. **DRAM and China (Stacy Aaron Rasgon):** There was an inquiry into the strength of DRAM, particularly the impact of China versus non-China contributions. The management confirmed high shipments to China and expected normalization in China's mix across the year.

2. **WFE Environment in 2024 (Vivek Arya):** Another question centered around the outlook for the Wafer Fab Equipment (WFE) environment in 2024, questioning Applied Materials' position given shifts towards more leading-edge and DRAM spending. The management highlighted confidence in diversified strength across sectors.

3. **Unique Question on Sculpta Preview (C.J. Muse):** Inquiring about a preview of discussions around the Sculpta technology at the SPIE conference, the management highlighted Sculpta's advantages in pattern shaping, offering alternatives to EUV double patterning and mapping out substantial growth expectations.

### Outlook or Guidance

Applied Materials projects a continued outperformance in the market due to strategic positions in foundational technologies such as DRAM, advanced packaging, and gate-all-around transistors. Despite expecting some fluctuations in the ICAPS sector, the company is optimistic about sustained growth, driven by secular trends in AI, IoT, and renewable energy. The detailed guidance includes an expected revenue of $6.5 billion for Q2 2024, with strategic investments and operational improvements aimed at achieving long-term margin goals of 48% to 48.5%.

**Comparison with Background Information:**
The guidance and the strategic focus on innovations such as high-bandwidth memory, gate-all-around transistors, and the emphasis on the ICAPS sector validate Applied Materials

Key Questions to follow

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