What to Expect From Applied Materials’ Upcoming Q4 Results?

Deutsche Bank analysts provided their outlook on Applied Materials, Inc. (NASDAQ:AMAT) ahead of the upcoming Q4 report, noting they see limited risks to the results and Q1 guidance following the company’s pre-announcement.

The analysts now have better clarity over the impacts of export restrictions and, in the short term, believe the company to have potentially offset some of the headwinds ($400 million in Q4 and Q1) by adjusting backlog and fulfilling orders from non-Chinese customers.

However, the analysts are incrementally more negative on the gross margin trajectory into 2023, as they expect the company to suggest the loss of profitable customers in domestic China.

For fiscal 2023, the analysts expect the company's revenue to decline 12% year-over-year (vs. the Street's 11% year-over-year decline estimate), as they factor in their top-down view that 2023 WFE could decline by 20%, offset by more stable performance in the company's AGS business.