Applied Materials, Inc. (NASDAQ:AMAT) shares fell in premarket trading Friday after the chip equipment maker issued strong third-quarter guidance despite reporting better-than-expected second-quarter results driven by AI-related semiconductor demand.

Applied Materials shares have gained more than 150% over the past year and were trading near their 52-week high of $448.45 ahead of the earnings release, reflecting elevated investor expectations.

Following the announcement of second-quarter results, some investors appeared to engage in profit-taking activity, contributing to the stock's decline despite the company reporting strong financial performance.

Strong Q2 Results Beat Expectations

The company reported second-quarter revenue of $7.91 billion, up 11% from a year earlier and above analyst estimates of $7.65 billion. Adjusted earnings came in at $2.86 per share, topping Wall Street expectations of $2.66 per share.

AI Demand Drives Semiconductor Growth

Applied Materials said growth was fueled by demand for leading-edge foundry logic, DRAM memory and advanced packaging technologies tied to artificial intelligence infrastructure.

Gross margin expanded to 50%, marking its highest level in more than 25 years, supported by pricing strength, differentiated products and manufacturing efficiencies.

Segment Performance Shows Broad-Based Strength

Semiconductor Systems revenue rose 10% year over year to $5.97 billion. DRAM revenue ...