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Applied Materials Inc., the largest US maker of chipmaking machinery, has given a bullish forecast for the current quarter, suggesting that the industry slump may be fading. The company expects fiscal fourth-quarter sales to be around .51 billion, surpassing the average analyst estimate of .88 billion. Additionally, excluding certain items, the company predicts a profit range of .82 to .18 per share, compared to the projected .61 per share. Chief Executive Officer Gary Dickerson attributed these positive results to the increasing use of artificial intelligence computing and the rise of internet-connected devices.

In the third quarter, Applied Materials recorded a profit of .90 per share (excluding certain items), while sales declined by 1.5% to .43 billion. These figures outperformed analysts’ estimates, which expected earnings of .73 per share and revenue of .16 billion. Although the chipmaker customers have recently slowed down their expansion plans due to a market glut for electronic components, Applied Materials remains confident that the industry will rebound, expecting total revenue to reach trillion by the end of the decade.

The demand for semiconductors has expanded beyond the computer industry, with a growing number of chips being used in vehicles, industrial equipment, and Internet of Things (IoT) devices such as smart home appliances and security systems. CEO Gary Dickerson emphasized this trend during a conference call with analysts, noting the increasing capabilities of consumer devices, vehicles, buildings, factories, and infrastructure.

Analysts predict that Applied Materials will return to sales growth in the second half of next year, as the industry’s recovery nears. Semiconductor-related stocks, including Applied Materials, have been favored by investors who anticipate benefits from the boom in artificial intelligence systems. However, the demand from memory chip manufacturers has been a weak spot for Applied Materials. The company stated that spending from memory customers is currently at its lowest level in over a decade.

Applied Materials recognizes the importance of the AI market and its rapid growth. Currently, about 5% of the company’s wafer-fab equipment is dedicated to the AI market, compared to 20% for data center chips and 10% to 15% for IoT equipment. Chief Financial Officer Brice Hill sees this percentage growing and considers it an important workload for Applied Materials in the future.

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