Analyst Note| Abhinav Davuluri, CFA |
Wide-moat Applied Materials reported fiscal third-quarter revenue above the midpoint of guidance and our expectations. Despite recent supply chain headwinds continuing to prevent the firm from fully meeting customer demand, the firm was able to deliver stronger results thanks to better-than-expected equipment output. Management maintained its view that unconstrained demand for wafer fab equipment, or WFE, to be over $100 billion in 2022, but conceded the actual figure would be in the mid-$90 billion range due to shipment delays. That said, we expect WFE spending in 2023 to be down year over year due to weaker memory investments, though we think leading-edge logic and foundry capital expenditures will be more resilient due to strategic investments by the likes of TSMC, Intel, and Samsung.