AMAT Q2 2024 earnings review

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Summary

• AMAT reported steady revenue, record installed chambers, but declining RPO;
• they appear to have received another subpoena relative to China business this month (May 2024);
• stock is slowly but surely heading towards the Distribution Zone.

Applied Materials, Inc. reported Q2 2024 earnings on May 16th, a boring call with no surprises and a tame Q&A. If you're a holder, that's a good thing. The stock is up about 2% in these intervening volatile 2 weeks. The interesting bit of information, the Performance Obligations number, was published with the 10-Q on May 23rd.

Before we look at the numbers, a quick refresher: with close to $180bn market cap, Applied Materials is the leading supplier of semiconductor manufacturing equipment. Their business can be broken down in:

• Semiconductor Systems, the actual equipment, further broken down in leading-edge ("inflections") and mature chip markets;
• Applied Global Services, spares, upgrades, everything to do with equipment and fab optimization;
• Display and Adjacent Markets, serving mostly the LCD, OLED market for consumer devices.

A concept worth repeating: this company - just like ASML, just like Lam Research (LRCX), just like any semi cap equipment supplier - is deeply embedded in the R&D of their customers, i.e. they have significant visibility into the roadmap of chip manufacturers years down the road.