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Applied Materials (NASDAQ: AMAT)
Q1 2024 Earnings Call
Feb 15, 2024, 4:30 p.m. ET
Summary:
Applied Materials reported their Q1 earnings for fiscal 2024, yielding strong revenue and exceeding earnings expectations.
Prepared Remarks:
Operator
Welcome to the Applied Materials earnings conference call. During the presentation, all participants will be in a listen-only mode. I would like to turn the conference over to Michael Sullivan, corporate vice president.
Please go ahead, sir.
Michael Sullivan — Corporate Vice President
Good afternoon, everyone, and thank you for joining Applied’s first quarter of fiscal 2024 earnings call. Joining me are Gary Dickerson, our president and CEO; and Brice Hill, our chief financial officer. Before we begin, I’d like to remind you that today’s call contains forward-looking statements, which are subject to risks and uncertainties that could cause our actual results to differ. Information concerning the risks and uncertainties is contained in Applied’s most recent Form 10-K filing with the SEC.
Today’s call also includes non-GAAP financial measures. Reconciliations to GAAP measures are found in today’s earnings press release and in our quarterly earnings materials, which are available on our website at ir.appliedmaterials.com. Before we begin, I have a calendar announcement. On Monday evening, February 26, Applied will host a panel at the SPIE Advanced Lithography and Patterning Conference in San Jose.
Market Analysis:
In the world of semiconductors, Applied Materials is preparing for inflection-focused innovations as they anticipate significant growth in AI, IoT, Electric Vehicles, and Renewable Energy sectors.
Inflection-Focused Innovations:
Applied Materials has strategically positioned itself to capitalize on the growing market dynamics, reaccelerating capital investment by cloud companies, and increasing fab utilization across all device types. With a forecast of ICAPS demand slightly lower than 2023, the company is focusing on strengthening NAND revenues and driving the continued strength in the DRAM business, particularly in the production of high-bandwidth memory, expected to be a key enabler for AI data centers.
Leadership in the DRAM Market:
Applied Materials has significantly increased its share of the DRAM market through its inflection-focused approach. The company witnessed a more than 10-point increase in market share compared to a decade earlier and the DRAM revenues surpassed those of its two closest process equipment peers combined. With a strong position in Logic Technologies, particularly in DRAM Peripheral Circuitry Applications, and advanced packaging, Applied Materials forecasts substantial revenue growth.
Advancements in Transistor Technology:
Applied Materials anticipates the transition to high-volume production of gate-all-around transistors, a key inflection that can provide over a 30% improvement in a chip’s energy efficiency, particularly enabling for high-performance AI data centers.
Applied Materials Maintains Competitive Edge Amidst Semiconductor Growth
Applied Materials, a key player in the semiconductor industry, has set a solid foundation for future success by exhibiting strong performance and delivering robust financial results in the first quarter of 2024. The company’s proactive stance at pivotal industry inflections and its commitment to collaborating with customers have fortified its position in an ever-evolving market.
Transition to Gate-All-Around Technology
The transition from FinFET to gate-all-around technology presents a tremendous opportunity for Applied Materials, expanding its available market by a substantial $1 billion for every 100,000 wafer starts per month of capacity. This strategic shift underscores the company’s vision for growth and innovation in the semiconductor sector, solidifying its foothold in the industry.
Pioneering Technological Advancements
Applied Materials’ relentless pursuit of technological innovation is evident in its groundbreaking development of industry-leading cold field emission eBeam technology. This innovation facilitates highly sensitive 2D and 3D imaging at speeds up to ten times higher, marking a significant leap forward in the realm of semiconductor manufacturing. Forecasts indicate a fourfold increase in revenue for the company’s CFE systems in 2024, representing a striking 50% of the total eBeam system sales.
Industry-Wide Innovation
The semiconductor industry is currently witnessing a remarkable surge in innovation, especially in leading-edge foundry logic and DRAM technologies, which drives the demand for enhanced metrology and inspection. Applied Materials has adeptly positioned itself to cater to these evolving needs, fostering sustained growth and advancement.
ICAPS Technology and Market Inflections
Applied Materials has been at the forefront of recognizing market inflections early on, particularly in the realm of ICAPS (Inspection, Metrology & Process Control) technology. The company is poised to seize the opportunities presented by the significant investments in research and development by its ICAPS customers, who allocate approximately 10% of their revenues, accounting for about $30 billion annually. Such foresight and responsiveness to market dynamics bode well for the company’s long-term prospects.
Agile Response to Industry Demands
The semiconductor landscape is continually shaped by the emergence of new technologies such as AI and IoT, electric vehicles, and renewable energy. Applied Materials has deftly aligned itself with these burgeoning trends, recognizing their potential to drive semiconductor growth and innovation. The company’s adaptability and preparedness to cater to the demands of next-generation chips demonstrate its acumen in responding to market shifts.
Strengthening R&D Collaboration
To bring its cutting-edge advances to the market expeditiously, Applied Materials is revolutionizing its approach to innovation. By fostering deeper collaboration with its customers and partners, the company is establishing a global innovation network, epitomized by the EPIC center being constructed in Silicon Valley. Furthermore, strategic partnerships with organizations such as Leti and MIT underscore Applied Materials’ commitment to driving innovation and propelling technological advancements.
Value-Driven Performance
Applied Materials’ robust financial performance reflects the efficacy of its value creation strategy. The company’s unwavering commitment to collaborating with customers and allocating substantial resources to research and development has ensured consistent value generation and sustained growth. The company’s stronghold in DRAM and its record equipment sales underscore its enduring market position and potential for future success.
Projections for Future Growth
Looking toward the future, Applied Materials projects significant growth in the semiconductor industry, driven by escalating market demands and expanding technical complexity. The company anticipates its equipment business to outgrow the market, propelled by its pivotal role in enabling key semiconductor advances necessary for driving growth in AI, IoT, and renewable energy sectors. The company’s unwavering hold on crucial technological aspects sets the stage for continued outperformance in the coming years.
Fueling the Growth Engine
Applied Materials is substantially bolstering its advanced services to deliver greater value to customers. By enabling customers to expedite research and development, expedite technology transition, and optimize yield, output, and costs, the company is positioned to sustain its growth trajectory. The significant portion of revenue generated from subscriptions, complemented by high renewal rates, underscores the company’s ability to continually create value for its customers and fortify its market position.
Future Outlook
Applied Materials’ unwavering commitment to innovation, steadfast focus on customer collaboration, and astute market positioning indicate a promising future for the company. With a judicious approach to technological advancements and an acute understanding of market dynamics, Applied Materials stands poised to maintain its competitive edge and continue its impressive growth journey in the semiconductor domain.
Applied Materials Q1 Financial Performance and Outlook for Q2
Applied Materials, a leader in semiconductor manufacturing, reported its Q1 results, showcasing a nuanced performance that captivated investors. Amidst the current wave of technological flux, the company’s financials and strategic initiatives paint a compelling picture for the future of Applied Materials in the competitive landscape of digital infrastructure.
Robust Q1 Performance
In the first quarter, net sales for Applied Materials declined slightly to $6.7 billion on a year-over-year basis. The non-GAAP gross margin witnessed a substantial growth of 110 basis points to 47.9%. Similarly, the non-GAAP EPS experienced nearly a 5% surge, reaching $2.13. These financial metrics reflect the company’s resilience in navigating market dynamics and fostering profitability.
Segment-wise Analysis
Applied Materials’ Semiconductor Systems garnered strong revenue of $4.91 billion, showcasing remarkable performance. The segment’s non-GAAP operating margin stood at an impressive 35.7%. Furthermore, Applied Global Services achieved record revenue, extending its streak of year-over-year growth for the 18th consecutive quarter. The segment’s revenue surged by approximately 8%, reaching nearly $1.8 billion, with a segment non-GAAP operating margin of 28.3%.
Display, another vital segment, reported revenue of $244 million, with a segment non-GAAP operating profit of 10.2%. This diversity across segments underscores Applied Materials’ robustness in catering to different facets of the tech industry.
Strong Cash Flow and Shareholder Returns
Applied Materials generated $2.3 billion in operating cash flow and $2.1 billion in free cash flow during the quarter. The company distributed $966 million to shareholders, reflecting its commitment to driving shareholder value. The strategic distribution included $266 million in dividends and a substantial $700 million in buybacks, showcasing prudent capital allocation. Applied Materials’ proactive approach to returning value to shareholders generates confidence among investors.
Guidance for Q2
Looking ahead, Applied Materials provided guidance for Q2, projecting revenue to be around $6.5 billion, plus or minus $400 million. The company expects non-GAAP EPS to reach $1.97, plus or minus $0.18. Within this outlook, Applied Materials anticipates Semiconductor Systems revenue of approximately $4.8 billion, AGS revenue of about $1.5 billion, and Display revenue of around $150 million. The projected non-GAAP gross margin stands at approximately 47.3%, with non-GAAP operating expenses expected to be around $1.235 billion, while modeling a tax rate of 12.5%.
Insightful Q&A
During the questions and answers session, analysts sought clarity on diverse topics, ranging from regional performance to future market trends. Stacy Rasgon from Bernstein Research inquired about the dominance of China in DRAM sales, pointing towards future projections. Brice Hill, the Chief Financial Officer, provided insightful responses, offering a glimpse into Applied Materials’ future distribution and segment performance dynamics.
Vivek Arya from Bank of America Merrill Lynch delved into the WFE environment in ’24, seeking Applied Materials’ perspective. Hill remained confident, offering a comprehensive analysis and reaffirming the company’s outlook for ’24, emphasizing the robust position in the evolving market dynamics.
Dynamic Market Positioning
Applied Materials’ performance in the context of shifting global trade dynamics and technological advancements depicts a narrative of enrichment. The fusion of technological prowess and strategic agility underlines the company’s endeavors to transcend market challenges and seize opportunities across industry segments.
As the semiconductor landscape evolves, Applied Materials stands poised at the intersection of innovation and adaptation, bolstering its market posture and investor appeal. The company’s grasp on global energy transformation and burgeoning collaborations sets the stage for sustained growth amidst industry inflections.
Investors keenly observe Applied Materials’ consistent innovation in ICAPS technology and its strategic partnerships, positioned to reap benefits from these transformative ventures. The company’s astute initiatives and collaborative approach highlight its competence to navigate future market dynamics adeptly.
The holistic performance and forward-looking guidance position Applied Materials as a formidable player in the semiconductor ecosystem, commanding admiration and attention from astute investors.
Vision and Vigilance: Applied’s 2024 Outlook and Industry Projections
Industry Insights Unveiled
After a transformative two-year growth spree, perspectives are shifting for ICAPS in China. The forward trajectory suggests a more moderate pace after the substantial climb in ICAPs and China-related business. The potential digestion in this industry segment has prompted recalibration.
A New Landscape Taking Shape
Though the pace of growth may taper off, opportunities for long-term market expansion remain on the horizon. Executives affirm that the underlying market dynamics show no sign of considerable alteration. With the winds of change blowing across the global economy, adaptations are inevitable.
Inquiries and Insights
Analysts have been keen to gauge Applied’s perspectives on the market. Brice Hill, Chief Financial Officer, emphasized a robust performance in 2023. The 2024 forecast, however, appears to be a tapestry interwoven with opportunities in certain domains and challenges in others.
Ruminations on Market Dynamics
There is an air of uncertainty about whether 2024 will witness another spell of outperformance or mark a phase of contemplation and reassessment. The confluence of rapidly expanding markets, especially ICAPS and certain inflections, makes forecasting a challenging task.
Gary Dickerson Steers the Narrative
Gary Dickerson, President and Chief Executive Officer, delineated how the company’s strategic positioning in pivotal inflections such as foundry logic and DRAM is poised to invigorate its performance. The developments in Sculpta technology and the promising trajectory it outlines for future growth were also underscored.
Peering into the Future
Anticipation hovers around the upcoming SPIE, where discussions on breakthrough technologies like Sculpta are set to unravel. The growth prospects for patterning and its evolution over the past decade have amplified the sense of enthusiasm among top executives.
Panoramic View of Possibilities
The strategic expansion and burgeoning opportunities in various market segments have fueled a palpable sense of excitement. The enticing promise of burgeoning technologies and customer traction signals a promising stride forward.
Market Momentum and Musings
Executives and analysts are delving into the market momentum, seeking clarity on what lies ahead. The data points to encouraging trends, with hints of optimism emanating from customers about the projected growth in 2025. The market’s upward trajectory and improving inventory dynamics indicate an optimistic outlook for the coming year.
Projection and Perspective
Insights on market dynamics project a positive outlook for 2025, buttressed by sentiments of optimism prevailing among market participants. A burgeoning investment cycle on the leading edge and the buoyancy in the memory markets pave the way for anticipation and strategic planning for the year ahead.
Pioneering Evolution
Applied’s success in the past two years has been underscored by the multi-faceted nature of the company’s product portfolio and its robust positioning. The inquiries delve into the confluence of factors such as customer preferences for all-in-one solutions and best-of-breed alternatives in niche applications.
Strategic Confidence
As the industry undergoes transformation, market players are navigating the complexities of customer preferences and the valor of adaptive solutions. The evolving dynamics within the industry necessitate a nimble and astute strategic vision.
## In-Depth Analysis of Applied Materials Q1 2022 Earnings Call
Applied Materials’ recent earnings call has revealed a fascinating array of insights about the company’s continued technological innovation, strategic positioning, and financial performance. The call resonated with an air of optimism and confidence, echoing the sentiments of a company that is steadfastly navigating through a dynamic landscape.
### Integrated Solutions Driving Uniqueness
During the call, CEO Gary Dickerson emphasized how the confluence of technologies within their portfolio has created an exceptional advantage. Through vivid imagery, he painted a picture of a processor chip with 15 billion transistors and 60 miles of wiring, then succinctly delved into the 1,500-step process of creating such a chip. This served as an excellent metaphor for the complexity and intricacy within their integrated solutions.
#### Co-Optimizing Technologies for Competitive Edge
Furthermore, Dickerson highlighted the capability to co-optimize numerous technologies such as gate-all-around, backside power, new DRAM technologies, and packaging technologies. His comparison of this advancement to a platform combining seven technologies under vacuum, ensuring the seamless movement of data at super high speeds, exhibited the immense competitive advantage derived from integrated solutions. This unique prowess, comprising about one-third of their portfolio, allows them to forge deeper innovation connections with their customers, positioning them as leaders in eBeam technology
### Cold Field Emission Electron Optics: Enabling Faster Learning
The discussion then progressed to their cold field emission electron optics that empower them to delve deep into the structures of their technologies. This profound insight allows Applied Materials to visualize and comprehend the intricate details of emerging technologies faster than others, emphasizing their ability to see four generations ahead in comparison to ongoing technologies. This visual acuity, in a metaphorical sense, enables them to navigate deeper connectivity in innovation alongside their customers.
### EPIC as a Game Changer
Dickerson exuded confidence as he labeled EPIC as a game changer, underlining the significant shift in their innovation methodology. The partnership with Leti for innovation and edge computing, alongside the presence of the advanced packaging lab in Singapore, showcased their relentless commitment to pioneering advancements. This solidifies their ability to understand the evolving needs of the industry substantially earlier than their counterparts, underscoring their inherent competitive edge.
### Margin Guidance and Prowess in Pricing Improvements
The discussion then transitioned to Chief Financial Officer Brice Hill, who shed light on the impact of the China mix normalization from 45% to 30% on gross margins. Hill acknowledged a detailed analysis of their underlying gross margin and firmly reiterated their goal of achieving a gross margin of 48% to 48.5% by 2025. Both Dickerson and Hill exuded confidence in their ability to progress steadily towards this target, emphasizing their progress in pricing improvements and their commitment to achieving their set goals.
### Insights into HBM and DRAM Business
As the call ventured into the realm of the HBM and DRAM businesses, it showcased Applied Materials’ ability to provide substantial insights into the intricate details of their business models. The discussion about the dye sizes and the shift in capacity towards HBM highlighted their grasp on market intricacies and their capacity to shift along with the changing landscape. This crystall clear viewpoint into their perspective adds credibility to their strategic positioning with customers.
### Navigating the Soft NAND Market
The narrative then elegantly transitioned towards the conventional DRAM and NAND businesses, reflecting on the improvements in utilization and prices. The measured analysis provided by Hill, followed by further insights from Dickerson, conveyed a sense of assurance amidst the soft market conditions. Their ability to succinctly articulate the evolving landscape of technologies and their resilience in navigating the prevalent market challenges proved to be a testament to their unwavering stance in the industry.
Applied Materials’ earnings call oozed with a balanced combination of steadfastness and agility, management expertise, and technical prowess. The insightful perspectives presented during the call not only provided investors with valuable insights but also reinforced the company’s narrative of resilience and unwavering commitment to technological excellence. As the curtains drew on the call, one was left with an affirmative reaffirmation of Applied Materials’ unwavering prowess and meticulous strategic positioning in the semiconductor industry landscape.
Applied Materials Earnings Call Highlights and Industry Insights
DRAM and NAND Prospects
Applied Materials, a stalwart in the semiconductor equipment industry, shared its insights and robust outlook during a recent earnings call, shedding light on the ever-evolving dynamic of demand and investment within the DRAM and NAND sectors.
Market Greeted with Optimism
Executives exuded confidence, attributing optimism to a spur in the DRAM side and improvements in pricing and utilization within the NAND sector. The company foregrounded its perspective that technological advances will serve as the linchpin steering investment within these segments.
Technological Advancements Shaping the Industry
In addressing the DRAM landscape, Gary Dickerson, the President and Chief Executive Officer, underscored the company’s significant share gains in the field over the last decade. He portrayed a vision for the future, buoyed by advancements in periphery, capacitors, and advanced packaging technologies, positioning Applied Materials favorably for continued outperformance within the DRAM domain. He imparted that the business is poised to exhibit sustained robust health. Amid the NAND segment, Dickerson noted a projected revenue hike in 2024 while emphasizing that the total volume remains below the 2022 benchmark, offering nuanced perspective.
Market Disruptions and Industry Delays
The discussion ventured into the potential impingement of advanced foundry logic programs due to deferment linked to chip sack funding setbacks, casting light on shifting timelines within the industry. The delay in channelling CHIPS bill grants was deliberated upon, with reflections on unforeseen disruptions and logistical delays stemming from government funding holdups. As recurring fab programs are deemed inevitable, the discourse surfaced the specter of near-term adjustments attributable to the lacuna in grant funding.
Market Performance and Growth
Joe Quatrochi from Wells Fargo Securities probed into the growth metrics of the ICAPS business, seeking quantified growth trends for calendar ’23, and weighing the potential of the recovery in the meeting edge to offset the projected decline in ICAPS. The response reiterated the burgeoning significance of ICAPS within Applied Materials’ revenue stream and emphasized the heightened focus on serving that market and propelling growth. The trajectory of the next few quarters juxtaposed the digestion in ICAPS and the projected acceleration in the leading edge, inciting contemplation of the dominating force between these two domains, thereby elucidating market dynamics.
Insights: China and WFE
Timothy Arcuri from UBS delved into discussions around the 2023 WFE baseline, inspiring dialogues on the Chinese sector’s potential to displace imports from the U.S. and Europe. Practical considerations and a cautious approach underscored the respondent’s refrain to delve into specific WFE baselines, as the discourse pivoted towards a more expansive view of Applied’s performance and market perception, embracing prudence amidst the ever-fluctuating market dynamics.
Amid the tapestry of insights and market predictions, what emerged is a vision of resolute optimism for Applied Materials, anchored by the intersection of technological innovation, market dynamics, and pragmatic business strategies. The call offered a panoramic view of the semiconductor landscape, where technological advancements, market disruptions, and potential pathways of growth intersect, unlocking a new chapter in the saga of semiconductor equipment. As that narrative unfolds, Applied Materials finds itself well-poised to navigate these shifting tides and emerge as a key player in the enthralling chronicles of the semiconductor industry.
The Future of ICAPS in the Global Market: A Closer Look at Industry Strength, Investments, and Material Engineering
Market Analysis and Demand Forecast
Reflecting on the latest conference call, the landscape of ICAPS strength and growth appears to be on solid ground. The discussions centered around the DRAM strength, packaging, and market expansion, indicating robust performance in these areas. The anticipation for third-party evaluations on the market’s size adds intrigue, leaving industry observers in a state of anticipation. The enthusiasm for the potential market growth was evident, and the outlook appears promising.
Evaluating Market Trends
Expressing confidence in the steadfast assets of the Chinese WFE, the discourse projected a positive stance on market outlook, dispelling concerns of undue stockpiling. Emphasizing an influx of new customers, the industry’s prospects seem brighter, stirring optimism for a buoyant market trajectory. Forecasts over the next four years allude to a surge in wafer start capacity, pointing to a robust market across the planning horizon. These indicators collectively paint a picture of burgeoning and sustainable demand in the market.
Government Incentives and Resource Allocation
The discourse encompassed an analysis of government incentives, debunking the notion of an ‘end-line free lunch.’ The allocation of resources, particularly in the equipment domain, was underscored, challenging the perception of a disproportionate distribution that might not serve the end market. This perspective advocated for a strategic and rational approach, ensuring the judicious utilization of resources without contributing to excessive, unproductive capacity.
Insightful Investor Queries and Clarity
The investor inquiries shed light on the nuances of ICAPS operations and revenues, bringing essential clarity to forecasting and strategic pursuits. The discussions touched on the $500 million HBM-related revenue projection, providing valuable insight into the company’s DRAM run rate and Advanced Packaging prospects. This exchange enriched the understanding of ICAPS’s market positioning and potential for sustained growth.
Long-Term Market Dynamics and Material Engineering
An in-depth exploration of market dynamics and material engineering unfolded intriguing insights into ICAPS’s strategies. The discussion delved into the intricate interplay between technology trends, material engineering, and market performance. Observing historical trends and projecting long-term implications, the conversation offered a compelling narrative of the company’s positioning and potential for future success.
Conclusion
The continued positive stance on ICAPS’s strength, market trends, and material engineering underscores a foundation of growth and resilience. With a keen eye on market dynamics and informed by historical context, investors have ample reason for optimism. As the company navigates through strategic market positioning and technological advancements, the thread of potential growth and prosperity affirm ICAPS’s role as a stalwart in the global market. This nuanced perspective enriches the investor dialogue and illuminates the path ahead for ICAPS in the evolving global landscape.
The Bright Future of Applied Materials: Earnings Call Takeaways
Overview
Applied Materials recently concluded its earnings call, and the insights shared shed light on the company’s performance and outlook moving forward. The transcript gives investors a unique opportunity to delve into the discussions, tease out essential takeaways, and gauge the company’s potential trajectory in the market.
Greenfield Growth in the Second Half
Navigating through the dense market landscape, Brice Hill, the company’s Chief Financial Officer, provided insight into the shifts expected in the second half. Hill highlighted the sustained growth in the leading edge, predominantly driven by greenfield new fab build-outs, signifying an exciting phase for Applied Materials.
Strategic Market Position
Hill expressed confidence in the company’s strategic position in gate-all-around, backside power, and advanced packaging. This confidence was underscored by the anticipation of significant market trends and a collaborative approach with customers to invest in crucial technology inflections, setting the stage for Applied Materials to become a major beneficiary as AI and IoT spending soar in the coming years.
Operational Progress and Services Growth
Aside from the strong portfolio, Hill lauded the company’s operational progress, instilling confidence in its ability to meet mounting demand and make strides in gross margins. Moreover, the acceleration of services growth to double digits and the generation of ample profit to fund a growing dividend was a testament to Applied Materials’ trajectory.
Closing Remarks
As the call drew to a close, Michael Sullivan, Corporate Vice President, expressed gratitude to the participants and emphasized the availability of a replay of the call. The management’s upbeat tone and positive outlook during the call present a promising narrative for the company’s future prospects.
If we have time for one more quick question, please. Certainly. One moment for our final question for today. And our final question for today comes from the line of Thomas O’Malley from Barclays. Your question, please.
Hey, guys, thanks for sneaking me in. I had another question on kind of the handoff in the first half, for the second half. Clearly, you’re kind of talking about the ICAPS business, getting a little softer in the back half, but leading edge is really picking up slightly offsetting. In terms of where you’re seeing the strength in the leading edge, is that greenfield new fab build-outs, or is that existing capacity additions? Any kind of help on where that strength is coming from in the second half would be helpful. Thank you.
Sure, Tom. It’s Brice. Typically, it’s greenfield. So, I think that when companies start the first part of a process, you’re typically putting in greenfield and you’ll shift some of your reused equipment later if you’re able to do that. So, that would be my expectation. Thank you.
Thank you. OK. Thanks, Tom. And appreciate that question. Brice, how would you like to give us your closing thoughts for today? Sure, Mike. What stands out to me from a summary perspective, is that we’ve anticipated the major market trends, and we work closely with our customers to invest in the most important technology inflections. I think will be a major beneficiary, as AI and IoT spending grows over the next several years. Our No. 1 positions in gate-all-around, backside power, and advanced packaging are higher than our corporate average, which gives me confidence that we’ll continue to gain share. Beyond our strong portfolio, we’re also making operational progress, which makes me confident we can meet strong demand and make progress in gross margins. Finally, our services growth is accelerating to double digits and generating more than enough profit to fund our growing dividend. Also, I hope to see many of you at the Morgan Stanley conference on March 4. Mike, thank you. Let’s close the call. OK. Thanks, Brice. And we’d like to thank everybody for joining us today. A replay of today’s call is going to be available on the IR page of our website by 5:00 Pacific Time, and we’d really like to thank you for your continued interest in Applied Materials. [Operator signoff] Duration: 0 minutes
Call participants:
Michael Sullivan — Corporate Vice President
Gary Dickerson — President and Chief Executive Officer
Brice Hill — Chief Financial Officer
Stacy Rasgon — AllianceBernstein — Analyst
Vivek Arya — Bank of America Merrill Lynch — Analyst
C.J. Muse — Cantor Fitzgerald — Analyst
Chris Caso — Wolfe Research — Analyst
Krish Sankar — TD Cowen — Analyst
Atif Malik — Citi — Analyst
Srini Pajjuri — Raymond James — Analyst
Toshiya Hari — Goldman Sachs — Analyst
Harlan Sur — JPMorgan Chase and Company — Analyst
Joe Quatrochi — Wells Fargo Securities — Analyst
Timothy Arcuri — UBS — Analyst
Joseph Moore — Morgan Stanley — Analyst
Brian Chin — Stifel Financial Corp. — Analyst
Charles Shi — Needham and Company — Analyst
Tom O’Malley — Barclays — Analyst
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