1、USA|Semi.Cap.EquipmentApplied Materials Inc.Equity ResearchAugust 15,2025 BlayneCurtis*|Equity Analyst(212)336-7493|EzraWeener*|Equity Associate(917)344-1860|CrawfordClarke,CFA*|Equity Associate+1(212)336-7399|AlexFernandez*|Equity Associate+1(212)778-8731|FY(Oct)2024A2025E2026E2027EEPS8.909.0910.07

2、11.43Cons.EPS8.909.6510.3811.06Rev.(MM)27,635.027,829.130,486.933,379.5Cons.Rev.27,635.029,140.131,241.832,318.3China Shoe Drops as Lumpiness Hits LeadingEdgeA reset on two fronts with China expected to fall off materially into Q3 and theLeading Edge ramp no longer expected to be linear.The negative

3、 shift in Chinais expected to last several quarters and little visibility was provided in terms ofthe timing when Leading Edge spend would return,though the total size of theramp was reiterated.The outlook takes a step back with China taking a structural step down after 2 years of overspendingand Le

4、ading Edge looking less reliable on timing.Expectations were set a little too high with LeadingEdge guided to grow sequentially through the rest of the year,which is now more lumpy giventhe concentration in TSMC and the timing of fab ramps.While the 2nm TAM and overall rampshould remain intact,the t

5、ariff uncertainty and shorter visibility make it hard to predict when thatwill re-accelerate.China saw some pull ins in CQ2,but is now expected to stay at muted levels forseveral quarters,digesting the significant over shipment and low utilization of tools from 23/24and resetting the base lower sugg

6、esting a significant headwind to WFE growth into 2026.Theguide does not fully show the extent of the pullback with$500M coming out of China ICAPS and$500M coming out of GAA offset by an incremental$100M in display and$300M in non-ChinaICAPS(which is not expected to repeat).Overall,the timing dynamic