Have you assessed how the international operations of Applied Materials (AMAT) performed in the quarter ended January 2025? For this maker of chipmaking equipment, possessing an expansive global footprint, parsing the trends of international revenues could be critical to gauge its financial resilience and growth prospects.
In the current global economy, which is more interconnected than ever, a company's success in penetrating international markets is crucial for its financial health and growth journey. Investors must understand a company's dependence on overseas markets, as this offers a window into the company's earnings stability, its ability to benefit from varied economic cycles and its potential for long-term growth.
Being present in foreign markets serves as protection against local economic declines and helps benefit from more rapidly expanding economies. Yet, such expansion also introduces challenges related to currency fluctuations, geopolitical uncertainties and varied market behaviors.
Our review of AMAT's last quarterly performance uncovered some notable trends in the revenue contributions from its international markets, which are commonly analyzed and tracked by Wall Street experts.
The company's total revenue for the quarter amounted to $7.17 billion, marking an increase of 6.8% from the year-ago quarter. We will next turn our attention to dissecting AMAT's international revenue to get a clearer picture of how significant its operations are outside its main base.
Unveiling Trends in AMAT's International Revenues
Korea generated $1.67 billion in revenues for the company in the last quarter, constituting 23.26% of the total. This represented a surprise of +40.93% compared to the $1.18 billion projected by Wall Street analysts. Comparatively, in the previous quarter, Korea accounted for $1.17 billion (16.64%), and in the year-ago quarter, it contributed $1.23 billion (18.35%) to the total revenue.
Of the total revenue, $1.18 billion came from Taiwan during the last fiscal quarter, accounting for 16.51%. This represented a surprise of +12.39% as analysts had expected the region to contribute $1.05 billion to the total revenue. In comparison, the region contributed $1.28 billion, or 18.23%, and $559 million, or 8.33%, to total revenue in the previous and year-ago quarters, respectively.
China accounted for 31.30% of the company's total revenue during the quarter, translating to $2.24 billion. Revenues from this region represented a surprise of -16.07%, with Wall Street analysts collectively expecting $2.67 billion. When compared to the preceding quarter and the same quarter in the previous year, China contributed $2.14 billion (30.32%) and $3 billion (44.68%) to the total revenue, respectively.
During the quarter, Europe contributed $330 million in revenue, making up 4.61% of the total revenue. When compared to the consensus estimate of $379.51 million, this meant a surprise of -13.05%. Looking back, Europe contributed $405 million, or 5.75%, in the previous quarter, and $410 million, or 6.11%, in the same quarter of the previous year.
Japan accounted for 7.54% of the company's total revenue during the quarter, translating to $540 million. Revenues from this region represented a surprise of -4.72%, with Wall Street analysts collectively expecting $566.72 million. When compared to the preceding quarter and the same quarter in the previous year, Japan contributed $581 million (8.25%) and $565 million (8.42%) to the total revenue, respectively.
Of the total revenue, $286 million came from Southeast Asia during the last fiscal quarter, accounting for 3.99%. This represented a surprise of -4.57% as analysts had expected the region to contribute $299.68 million to the total revenue. In comparison, the region contributed $314 million, or 4.46%, and $186 million, or 2.77%, to total revenue in the previous and year-ago quarters, respectively.
Prospective Revenues in International Markets
Wall Street analysts expect Applied Materials to report a total revenue of $7.13 billion in the current fiscal quarter, which suggests an increase of 7.2% from the prior-year quarter. Revenue shares from Korea, Taiwan, China, Europe, Japan and Southeast Asia are predicted to be 16.4%, 16.6%, 36.2%, 5.2%, 7.9% and 4.6%, corresponding to amounts of $1.17 billion, $1.18 billion, $2.58 billion, $370.14 million, $565.5 million and $329.54 million, respectively.
For the full year, a total revenue of $29.1 billion is expected for the company, reflecting an increase of 7.1% from the year before. The revenues from Korea, Taiwan, China, Europe, Japan and Southeast Asia are expected to make up 16.5%, 16.1%, 35.4%, 5.3%, 8% and 4.6% of this total, corresponding to $4.79 billion, $4.69 billion, $10.3 billion, $1.54 billion, $2.32 billion and $1.33 billion respectively.
Concluding Remarks
Relying on international markets for revenues, Applied Materials faces both prospects and perils. Thus, tracking the company's international revenue trends is essential for accurately projecting its future trajectory.
In an era of growing international interdependencies and escalating geopolitical disputes, Wall Street analysts are vigilant in tracking these trends for businesses with a global reach, in order to refine their predictions of earnings. It should be noted, however, that a multitude of other elements, such as a company's domestic position, also play a significant role in shaping the earnings forecasts.
Here at Zacks, we put a great deal of emphasis on a company's changing earnings outlook, as empirical research has shown that's a powerful force driving a stock's near-term price performance. Quite naturally, the correlation is positive here -- an upward revision in earnings estimates drives the stock price higher.
The Zacks Rank, our proprietary stock rating mechanism, demonstrates a notable performance history confirmed through external audits. It effectively utilizes the power of earnings estimate revisions to act as a predictor of a stock's price performance in the near term.
Applied Materials currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
A Look at Applied Materials' Recent Stock Price Performance
Over the preceding four weeks, the stock's value has diminished by 11.9%, against an upturn of 4.7% in the Zacks S&P 500 composite. In parallel, the Zacks Computer and Technology sector, which counts Applied Materials among its entities, has appreciated by 4.1%. Over the past three months, the company's shares have seen a decline of 3.3% versus the S&P 500's 3.1% increase. The sector overall has witnessed an increase of 4.1% over the same period.
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