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Applied Materials Shares Drop on Weak China Demand and Tariff Uncertainty

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Applied Materials (AMAT.O) shares fell roughly 12% in Friday morning trading after the chip-equipment maker issued a disappointing revenue and profit forecast, raising investor concerns about the impact of U.S.-China trade tensions on demand. The decline follows warnings from Dutch rival ASML (ASML.AS), highlighting continued uncertainty over the effects of U.S. tariffs on the semiconductor industry.

CEO Gary Dickerson cited “wide-ranging implications for the semiconductor industry” during a post-earnings call, pointing to lower visibility and heightened uncertainty in the near term due to dynamic policy developments. China, which represented 35% of Applied Materials’ July-quarter sales, has become a key risk as U.S. export restrictions weigh on new equipment orders.

Smaller peer KLA Corp (KLAC.O), which also has a strong presence in China, expects softer demand amid ongoing Sino-U.S. trade tensions, while Deutsche Bank strategists warned that volatility in China is clouding visibility into earnings potential both geopolitically and cyclically.

Applied Materials forecast fourth-quarter revenue of $6.70 billion, plus or minus $500 million, below analysts’ consensus of $7.33 billion. Its projected profit also fell short of expectations. If losses persist, the company could shed over $18 billion from its $151.06 billion market value as of Thursday’s close.

J.P. Morgan analyst Harlan Sur suggested that the slowdown in China reflects timing of spending rather than structural weaknesses. Applied’s stock has risen 1.2% year-to-date, trailing the Nasdaq (.IXIC) up 12.3% and the S&P 500 (.SPX) up 10%.

Shares of other chip-equipment makers, including KLA Corp and Lam Research (LRCX.O), also fell following Applied’s results, down 5.5% and 4.3%, respectively. Applied reported third-quarter revenue of $7.30 billion, up 8% year-on-year and above the $7.22 billion consensus. Its stock trades at a forward price-to-earnings ratio of 19, lower than ASML’s 26.04, Lam’s 23.56, and KLA’s 26.82.

Dassault Systèmes Delays Earnings Target to 2029, Cuts Revenue Growth Outlook

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French software firm Dassault Systèmes announced on Friday that it has extended the timeline for achieving its medium-term earnings target by one year, now expecting to reach it in 2029 instead of 2028. The company also lowered its revenue growth forecast amid weakening demand in the automotive sector and ongoing tariff-related uncertainties.

Previously, Dassault Systèmes aimed to double its non-IFRS diluted earnings per share (EPS) to between €2.20 and €2.40 by 2028 under its 2023–2028 strategy. The new timeline shifts this goal to 2029.

At its capital markets day event, the company revised down its medium-term revenue growth target to a compound annual growth rate (CAGR) of 7% to 8% from 2024 to 2029. This is a reduction from the previous forecast of double-digit growth of 10% for the 2023–2028 period.

The company cited a prolonged slowdown in the global automotive industry and market volatility linked to U.S. President Donald Trump’s tariffs as key challenges. Dassault Systèmes had already lowered its 2025 operating margin growth forecast in April and revised its 2024 forecasts twice last year.

These repeated downward adjustments have raised investor concerns about Dassault Systèmes’ ability to meet its medium- and long-term financial goals. Following the announcement, the company’s shares fell 1.7% as of 15:30 GMT.

Elon Musk’s xAI Projects Over $13 Billion Annual Earnings by 2029, Bloomberg Reports

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Artificial intelligence startup xAI, founded by Elon Musk, expects to generate more than $13 billion in annual earnings by 2029, according to data shared by its banker Morgan Stanley, Bloomberg News reported on Thursday.

Morgan Stanley is seeking investors for a $5 billion debt sale by xAI and has disclosed the AI company’s financials to potential investors willing to commit at least $50 million. The figures reveal that xAI aims to reach $1 billion in gross revenue by the end of 2025 and $14 billion by 2029.

In the first quarter of this year, xAI reported $52 million in gross revenue but faced a loss of $341 million before interest, taxes, depreciation, and amortization (EBITDA). Projections show a rapid improvement, with EBITDA expected to rise to $2.7 billion by 2027 and hit $13.1 billion in 2029.

Like many AI startups, xAI is investing heavily in infrastructure, planning $18 billion in future data center investments following $2.6 billion in capital expenditures so far.

This financial unveiling coincides with a highly public spat between Elon Musk and former U.S. President Donald Trump, involving threats over government contracts. The effect of this dispute on xAI’s debt sale remains unclear.

In addition to the debt raise, xAI is reportedly targeting a valuation of $113 billion in a concurrent $300 million share sale.

Neither Morgan Stanley nor xAI has responded to Reuters requests for comment.