Applied Materials (AMAT) reported net revenue of $7,166 million for Q1 2025, representing a 7% increase compared to $6,707 million in Q1 2024. This growth was primarily driven by higher customer investments in leading-edge manufacturing technologies within the Semiconductor Systems segment, which remains the largest contributor to net revenue. The Semiconductor Systems segment alone generated $5,356 million in revenue, up from $4,909 million in the prior year, reflecting a 9% increase. The Applied Global Services (AGS) segment also saw revenue growth, reaching $1,594 million, up from $1,476 million in Q1 2024. However, the Display segment experienced a decline in revenue, falling to $183 million from $244 million in the prior year, due to reduced customer investments in display fabrication equipment.

‍Net income for Q1 2025 was $1,185 million, a significant decline from $2,019 million in Q1 2024. This decrease was influenced by a higher provision for income taxes, which rose to $934 million in Q1 2025 from $284 million in Q1 2024. Earnings per diluted share also dropped to $1.45 from $2.41 in the prior year. Despite the decline in net income, the company achieved a gross margin of 48.8%, up from 47.8% in Q1 2024, driven by favorable changes in customer and product mix and lower material and manufacturing costs.

‍Operating income for Q1 2025 increased to $2,175 million, compared to $1,967 million in Q1 2024, reflecting a 10.6% growth. The operating margin also improved to 30.4% from 29.3% in the prior year. This improvement was primarily driven by the Semiconductor Systems segment, which achieved an operating income of $1,986 million, up from $1,744 million in Q1 2024, due to favorable customer and product mix and lower material costs. However, the Display segment's operating income declined to $14 million from $25 million in the prior year, reflecting a 44% decrease.

‍Cash provided by operating activities in Q1 2025 was $925 million, a sharp decline from $2,325 million in Q1 2024. This decrease was primarily due to lower collections of customer receivable balances and reduced new billings for products and services. Cash used in investing activities increased to $897 million from $447 million in the prior year, driven by higher capital expenditures and net purchases of investments. Additionally, cash used in financing activities rose to $1,786 million from $1,157 million in Q1 2024, largely due to increased common stock repurchases, which totaled $1,318 million in Q1 2025 compared to $700 million in the prior year.

‍Geographically, revenue from Korea and Taiwan saw significant growth in Q1 2025, with Korea's revenue increasing by 35% to $1,667 million and Taiwan's revenue more than doubling to $1,183 million. In contrast, revenue from China declined by 25% to $2,243 million, primarily due to reduced investments in semiconductor equipment. Revenue from the United States grew by 21% to $917 million, driven by investments in semiconductor equipment. These regional trends highlight shifts in customer spending patterns and strategic investments in semiconductor technologies.

‍Research, development, and engineering (RD&E) expenses increased to $859 million in Q1 2025, up from $754 million in Q1 2024, reflecting the company's ongoing investments in product development initiatives. Marketing and selling expenses remained flat at $206 million, while general and administrative (G&A) expenses decreased to $256 million from $276 million in the prior year, primarily due to lower professional fees and variable compensation. These changes indicate a strategic focus on innovation while maintaining cost discipline in other areas.

‍The Semiconductor Systems segment continued to dominate Applied Materials' revenue mix, accounting for 68% of the segment's revenue from foundry, logic, and other markets in Q1 2025, up from 62% in Q1 2024. However, revenue from DRAM customers declined to 28% from 34% in the prior year, reflecting reduced investments in DRAM technology transitions. This shift underscores the growing importance of foundry and logic markets in driving the company's growth.

‍The company's balance sheet remained strong as of January 26, 2025, with total assets of $33,338 million and total liabilities of $14,713 million. Working capital stood at $13.0 billion, slightly up from $12.8 billion as of October 27, 2024. Cash and cash equivalents decreased to $6,264 million from $8,022 million at the end of fiscal 2024, reflecting higher cash outflows for stock repurchases and investments. The company's equity position also remained robust, with total stockholders' equity at $18,625 million.