Applied Materials [AMAT], the world’s largest supplier of wafer fabrication equipment and display manufacturing equipment, is scheduled to report its Q3 earnings on August 14.
Like other semiconductor equipment makers, Applied Materials has long had to navigate the complex relationship between the US and its largest market, China.
The plot has thickened in 2025 with the return of Donald Trump as US President and the revival of a tit-for-tat tariff war. The company adjusted its forecast downward in May, saying it had decided to stop servicing equipment at some consumer sites in China; however, given the ever-evolving nature of technology export restrictions under President Trump, some investors are wondering if the worst is yet to come.
What to Expect from AMAT’s Q3 Earnings
Wall Street expects Applied Materials to report quarterly revenue in the range of $7bn–7.37bn, up from $6.78bn reported a year ago.
Earnings were also seen improving from $2.12 reported a year ago to an estimated range of $2.30–2.46.
Meanwhile, Applied Materials’ forecast for Q3 sees revenue at $7.2bn and non-GAAP diluted EPS at $2.35.
The company expects Q3 non-GAAP gross margin at 48.3%, compared to 49.1% in Q2 and 47.3% a year ago.
If Applied Materials’ last two earnings reports are anything to go by, then investors should proceed with caution, as the market has shown a tendency to punish subpar results.
On May 16, Applied Materials saw its shares fall by over 5% after reporting less-than-expected Q2 revenue.
Earlier in the year, AMAT stock slumped over 5% on February 14 despite beating Q1 revenue and earnings estimates. The selloff came after the company said that 2025 revenue would be hurt by the restrictions on semiconductor-related exports to China.
On a post-earnings call, CEO Gary Dickerson added that 2025 revenue would take a hit of $400m due to the curbs.
As of August 8, AMAT stock was up 14.26% in the year to date and up 4.54% in the past 12 months.
What to Monitor: China Impact
China is Applied Material’s biggest market. In FY 2024, the company derived 37% of its full-year revenue from the country.
South Korea and Taiwan followed, contributing 17% and 15%, respectively. Collectively, Asia accounted for 81% of AMAT’s revenue that year.
However, Chinese contributions to AMAT’s revenue have dropped consecutively over the last two quarters, after the US government introduced new curbs on the export of advanced semiconductor manufacturing equipment to Asia’s largest economy.
In Q2 2025, Applied Materials reported a notable drop in revenue from China, with revenue share falling to 25% from 45% a year ago.
Most of the impact is coming from the company’s inability to provide upkeep and optimization services to Chinese customers.
Applied Materials classifies such revenue as “Applied Global Services”. It accounted for 23% of the company’s full-year revenue in 2024.
Semiconductor manufacturing systems accounted for 73% of the company’s full-year revenue, while display manufacturing contributed 3%.
Keep a Close Eye on Tariffs
2025 has also thrown a new curveball at multinational corporations in the form of reciprocal tariffs between the US and the rest of the world.
Although US President Trump first introduced the tariffs in April, many of them did not come into effect until August, as nations were given time to negotiate deals.
China and the US even managed to agree on a temporary deal to reduce tariffs.
However, that truce between China and the US on tariffs is set to expire later in August, while tariffs on more than 90 countries — including South Korea and Japan — came into effect on August 7.
Although government officials in Taiwan and South Korea have said that chipmaking companies such as Taiwan Semiconductor Manufacturing Company [TSM], SK Hynix [000660:KS] and Samsung [SSNLF] would be exempt from the new levy, the market remains sensitive to tariff-related concerns.
In mid-July, semiconductor manufacturing equipment provider ASML [ASML] saw its shares drop by 10.5% after the company stated that it was uncertain about revenue growth in 2026 due to tariff uncertainties.
“Looking at 2026, we see that our [artificial intelligence] customers’ fundamentals remain strong. At the same time, we continue to see increasing uncertainty driven by macroeconomic and geopolitical developments. Therefore, while we still prepare for growth in 2026, we cannot confirm it at this stage,” said ASML CEO Christophe Fouquet.
Separately, Reuters reported that Fouquet told journalists on a media call that chipmakers building factories in the US were delaying finalizing investments as they await clarity.
| AMAT | ASML | SSNLF |
Market Cap | $148.36bn | $284.20bn | $340.80bn |
P/E Ratio | 22.46 | 25.75 | 8.44 |
Estimated Sales Growth (Current Fiscal Year) | 5.93% | 14.10% | 5.20% |
Estimated Sales Growth (Next Fiscal Year) | 5.99% | 4.37% | 6.34% |
Source: Yahoo Finance
AMAT Eyes Expanding US Presence
Applied Material’s growth within the US market will be a key trend to monitor in this quarterly report.
In the previous quarter, the company earned 11% of its net revenue from the US. That figure is widely expected to grow as the Trump administration pressures companies to bring manufacturing to the US.
On August 6, Apple [AAPL] announced that it will invest an extra $100bn to bring its supply chain and advanced manufacturing to the US, taking its total investment to $600bn over four years.
The iPhone added that it will work with 10 companies, including Applied Materials and Texas Instruments [TI], under the American Manufacturing Program to create an end-to-end silicon supply chain in the US.
Applied Materials is set to supply semiconductor manufacturing equipment to Texas Instruments’ chipmaking factories.
With the likes of TSMC, Samsung and GlobalFoundries [GFS] all set to increase chip production in the US, demand for Applied Materials’ products could see an increase at home.
Conclusion
Applied Materials finds itself at a crossroads, having to forgo revenue from some of its most lucrative Chinese customers while shifting its focus toward US manufacturing.
The upcoming earnings report will reveal its revenue and profit forecasts for the remainder of the year, offering a clearer picture of how well the company is navigating these changes.
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