The company reported a 10% year-on-year rise in fiscal third quarter revenue to US$2.49bn late on Thursday and a 17% hike in orders for new equipment, but analysts had expected a higher revenue number, in the region of US$2.54bn.
To make matters worse, the company's guidance for fourth quarter revenue was below the expectations of analysts who cover the firm.
The company expects the current quarter's sales could be as much as 7% down on the previous quarter, with the best case scenario being no change.
Underlying earnings per share of 33 cents a share were in line with market expectations.
"Applied is focused on profitable growth and the results show in our third-quarter performance when we delivered our highest ever 300mm semiconductor equipment orders and record revenue in services," said chief executive officer, Gary Dickerson.
"Our highly differentiated materials engineering products help customers accelerate major technology inflections including 3D NAND, and this quarter we generated the highest flash memory orders in our history," he added.
Investors were unimpressed and the shares eased back by about 1% in post-close trading on Thursday.
Broker Jefferies stuck with its 'buy' rating but reduced its price target from US$28 to US$25.
"Strong order growth and optimism about share gains in 3D NAND reinforces our secular thesis, and is likely to be a positive surprise for investors. While we believe our foundry competition thesis is also playing out, we misjudged timing of foundry orders. However, following
CapEx cuts from TSMC and Intel we think foundry weakness was baked into the stock, which has declined 32% YTD (vs. SOX -8%) in spite of solid fundamentals," the broker said, adding that the stock remains one of its top picks.