Applied Materials gave no spending forecast, and its shares fell 6.69%

Applied Materials fell 6.69% to US$464.24 on Tuesday. The company makes the machines chipmakers use to build their chips, and it had just held an investor day.

The missing number was the one investors wanted most. Chief executive Gary Dickerson gave no forecast for wafer fabrication equipment spending, the industry's total budget for chipmaking tools. That figure is how investors size up the company's own growth plans.

Dickerson said demand for computing power will keep growing quickly. He also named what sets the pace: factory space, supply chains, and the financing of the energy infrastructure that data centres need.

Chart: Applied Materials' value outgrew its sales. Revenue rose from US$23.1bn to US$28.4bn, FY2021 to FY2025 (left scale); year-end market value from US$123.4bn to US$182.2bn (right scale). Two scales, both from zero. — This story’s chart of the day.

The rest of the toolmakers followed. Lam Research and KLA each fell about 4%, and ASML, the Dutch maker of lithography machines, lost about 3%.

The mood was already fragile. On Monday in Singapore, Broadcom chief executive Hock Tan said many AI investors have no clue what they are investing in, and likened it to a casino. Chip stocks in Seoul took the worst of it on Tuesday. Broadcom itself rose 0.7%.

Boiled down

a skipped forecast tells you the timing is uncertain, and says little about demand. Our read is that the build-out now depends on power stations and buildings as much as on chips, and those are much harder to schedule.

This story ran in The September Slowdown Wednesday 14 October’s edition, with the market snapshot, the other two stories, the numbers and the week ahead. Read the whole edition →

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Wednesday 4 November AMD's data centre sales nearly doubled, and it has guided to US$17 billion for this quarter
Friday 23 October Lam Research fell 11.76% after saying it could not get enough parts, and chip stocks followed
Friday 16 October TSMC made a record profit and raised its sights, and its shares still fell 1.8%

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