Applied Materials (AMAT) reported strong financial performance for Q4 2024, with net revenue reaching $27.176 billion, a 2% increase compared to $26.517 billion in 2023. This growth was driven by higher revenues in the Semiconductor Systems and Applied Global Services segments, partially offset by a decline in the Display segment.

The Semiconductor Systems segment remained the largest contributor to revenue, generating $19.911 billion in 2024, up from $19.698 billion in 2023. This growth was supported by increased investments in DRAM technology transitions and non-leading-edge manufacturing technologies, despite a decline in leading-edge manufacturing investments. The segment's operating margin improved slightly to 35.1% from 34.9% in 2023, driven by lower material, freight, and manufacturing costs, as well as favorable changes in customer and product mix.

Applied Global Services (AGS) also showed robust growth, with revenue increasing to $6.225 billion in 2024 from $5.732 billion in 2023, reflecting a 19% rise in operating income. This was attributed to higher revenues from long-term service agreements and customer spending on spares, offset by lower investments in 200mm equipment. The operating margin for AGS improved to 29.1% from 26.7% in 2023.

The Display segment experienced a decline in performance, with revenue slightly increasing to $885 million in 2024 from $868 million in 2023, but operating income dropped significantly to $51 million from $114 million. This was due to lower customer investments in display fabrication equipment for TVs, partially offset by higher investments in IT products like laptops and tablets.

Geographically, China emerged as a key growth driver, with revenue increasing by 40% to $10.117 billion in 2024, representing 37% of total revenue. This growth was fueled by investments in semiconductor equipment and spares. Conversely, revenue from Taiwan and Europe declined by 29% and 33%, respectively, due to reduced investments in semiconductor equipment.

Net income for fiscal 2024 rose to $7.177 billion, up from $6.856 billion in 2023, reflecting a 5% increase. This was supported by higher gross profit, which grew to $12.897 billion from $12.384 billion in 2023, driven by cost efficiencies and favorable product mix. Earnings per share also improved, with diluted EPS rising to $8.61 from $8.11 in 2023.

Operating expenses increased to $5.030 billion in 2024, up from $4.730 billion in 2023. This was primarily due to higher research, development, and engineering (RD&E) expenses, which rose to $3.233 billion, reflecting investments in product development and technical capabilities. Marketing and selling expenses also increased due to additional headcount, while general and administrative expenses grew due to higher share-based compensation and professional fees.

Cash flow from operating activities remained strong at $8.677 billion, slightly down from $8.700 billion in 2023. This stability was achieved despite lower collections of customer receivables, offset by higher net income and reduced vendor payments. The company used $2.327 billion in investing activities, primarily for capital expenditures and investments in technology, and $4.470 billion in financing activities, including $3.823 billion for stock repurchases and $1.192 billion for dividends.

The company's backlog decreased to $15.873 billion in 2024 from $17.171 billion in 2023, with the Semiconductor Systems segment accounting for the majority of the decline. Approximately 31% of the backlog is not expected to be filled within the next 12 months, indicating potential challenges in converting orders to revenue in the near term.

Applied Materials maintained a strong balance sheet, with total assets increasing to $34.409 billion in 2024 from $30.729 billion in 2023. Cash, cash equivalents, and investments grew to $12.258 billion, providing ample liquidity for future investments and shareholder returns. The company also reduced its treasury stock by $3.851 billion through repurchases, reflecting its commitment to returning value to shareholders.