Markets
markets
Luke Kawa

Applied Materials dips despite posting modest beats on Q4 sales, EPS as restrictions on sales to China weigh on performance

Solid Q4 results and a slightly better-than-anticipated outlook from Applied Materials still aren’t inspiring investors in premarket trading, with the stock down 4.8% as of 4:40 a.m. ET.

For the three months ended October 26, the firm reported:

  • Revenue: $6.8 billion (compared to analyst estimates of $6.67 billion and guidance for $6.2 billion to $7.2 billion)

  • Adjusted earnings per share: $2.17 (estimate: $2.11, guidance: $1.91 to $2.21)

Q1 guidance was also modestly ahead of estimates, as management pointed to sales of about $6.85 billion (plus or minus $500 million) with adjusted earnings per share of $2.18 (plus or minus $0.05). The consensus estimates for these figures were $6.81 billion and $2.15, respectively.

The company is preparing to meet a bigger pickup in demand by the middle of next year.

“Based on our conversations with our customers and partners, we are preparing Applied’s operations and service organizations to be ready to support higher demand beginning in the second half of calendar 2026,” Chief Financial Officer Brice Hill said.

Applied Materials was up more than 35% year to date heading into this report. That being said, it’s thoroughly lagged peers KLA Corp and Lam Research in the semi wafer fab equipment space, with the bulk of that underperformance coming after its Q3 earnings report in mid-August included underwhelming guidance for these Q4 results.

The entire space has come under scrutiny for its business with China, but Applied Materials has had the worst go of it: in early October, management flagged a $600 million hit to fiscal 2026 sales because of export restrictions.

“In 2026, we expect wafer fab equipment spending in China to be lower, and we are not anticipating significant changes to market restrictions,” CEO Gary Dickerson said on the conference call following earnings, noting that the share of China’s wafer fab equipment market the firm couldn’t sell to rose to “well over 20%” in late 2024 and early 2025 due to export restrictions, up from 10% early last year.

Needham analyst Charles Shi flagged how export restrictions shifted Applied Materials’ ability to meet demand from other customers, which helped Q4 sales while hurting its Q1 outlook:

“We believe the stock was down in after hours as the buy side bogey for F1Q26 was as high as $7.1B, partially due to buy side viewing the $110MM China revenue in F4Q25 and some of the $600MM China revenue in FY26, which were thought to be lost due to recent BIS 50% affiliate rule, should be added back as the US later suspended the rule for one year. Management clarified that some ex-China revenue were pulled into October when the BIS rule was first announced in late September, and it is the reason why AMAT actually beat the original F4Q25 guidance (which it gets no credit for), and AMAT did not guide a higher number for F1Q26 (which ends up hurting the stock).”

More Markets

See all Markets
Tasha Matsumoto
6/5/26
Stocks tumble amid AI sell-off as a blowout jobs report dampens hope of a rate cut this year

The S&P 500 broke its streak of nine consecutive weekly gains, while the Nasdaq 100 had its worst day since April 2025.

Yellowstone: America's First National Park
Dickens, Great Expectations, He said, Aha! would you?

Tech tumbles as momentum stocks run into a blowout jobs report and a wave of profit-taking

The AI trade is under some pressure, taking prices back like... a few days. President Donald Trump is not a fan of the price action.

David Crowther6/5/26
Trump Administration Considers Reclassifying Marijuana As A Less Dangerous Drug

Trulieve to list on NYSE, a first for US cannabis sector

More may be on the way: several other US cannabis companies have announced reverse stock splits with the intention of listing on a major exchange.

J. Edward Moreno6/5/26
markets
Helena Cheng

Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

  • EPS of $1.69 vs. the $1.68 expected.

  • Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemon’s geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected “halo effect” across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemon’s valuation has already been steadily compressing for years. While it was once one of retail’s richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi O’Neill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brand’s growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

markets
Paige Oamek

US job growth skyrocketed in May, blasting past expectations

The US economy added 172,000 jobs in the month of May, the Bureau of Labor Statistics reported Friday, sending 10-year Treasury yields higher.

The strong May job market surprised economists. Experts had predicted only 85,000 new jobs — just half the reported number. The unemployment rate held steady at 4.3%, as expected.

The job growth story is a hopeful spot for the economy as consumers continue to feel inflationary pressure from the Iran war.

Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

Latest Stories

Sherwood Media, LLC and Chartr Limited produce fresh and unique perspectives on topical financial news and are fully owned subsidiaries of Robinhood Markets, Inc., and any views expressed here do not necessarily reflect the views of any other Robinhood affiliate, including Robinhood Markets, Inc., Robinhood Financial LLC, Robinhood Securities, LLC, Robinhood Crypto, LLC, Robinhood Money, LLC, Robinhood U.K. Ltd, Robinhood Derivatives, LLC, Robinhood Gold, LLC, Robinhood Asset Management, LLC, Robinhood Credit, Inc., Robinhood Ventures DE, LLC and, where applicable, its managed investment vehicles.
©2026 Sherwood Media, LLC