Applied Materials Stock Drops After Chips Act Denies Funding
Applied Materials Inc (NASDAQ:AMAT) recently learned from U.S. officials that it will not receive Chips Act funding for its anticipated research and development center in Sunnyvale, California.
The decision deals a significant blow to the company’s $4 billion project, Bloomberg reports. The stock is trading lower in Thursday’s premarket session.
The Commerce Department concluded that the project needed to meet the qualifications for the program designed for large-scale chip manufacturing sites.
In May 2023, Applied Materials announced the project during a summit attended by Vice President Kamala Harris and key executives from its customer base. At the time, CEO Gary Dickerson highlighted that the project’s scope would depend heavily on U.S. incentives.
The Commerce Department’s decision implies that the U.S. will unlikely support major chip equipment makers with direct Chips Act subsidies.
Initially, Applied Materials aimed to secure funding through a program for commercial R&D facilities. However, administrative and congressional disputes over military chip initiatives led the Commerce Department to abandon this program.
In May, Applied Materials reported second-quarter revenue of $6.646 billion, flat year-on-year, which beat the consensus estimate of $6.537 billion. The adjusted EPS of $2.09 beat analyst estimates of $1.99.
Applied Materials expects third-quarter revenue of $6.65 billion, plus or minus $400 million, versus estimates of $6.576 billion. The company expects third-quarter adjusted EPS of $1.83 – $2.19 per share versus estimates of $1.98.
Applied Materials stock gained 39% in the last 12 months, reflecting the technological shift, including AI, IoT, electric vehicles, and clean energy. Investors can gain exposure to the stock through VanEck Semiconductor ETF (NASDAQ:SMH) and iShares Semiconductor ETF (NASDAQ:SOXX).
Price Action: AMAT is down 1.44% at $209.15 premarket at last check Thursday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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