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    Nova Ltd (NVMI)

    Q3 2024 Earnings Summary

    Reported on Mar 12, 2025 (Before Market Open)
    Pre-Earnings Price$191.31Last close (Nov 6, 2024)
    Post-Earnings Price$203.99Open (Nov 7, 2024)
    Price Change
    $12.68(+6.63%)

    What went well

    • NVMI remains confident in achieving $500 million in cumulative gate-all-around revenue by the end of 2026, indicating strong demand and positioning in advanced technologies despite industry challenges.
    • NVMI expects to outperform WFE growth in 2025 by a factor of 1.5, as they have historically done, suggesting strong growth prospects beyond the market average.
    • NVMI anticipates growth in the memory market, especially in DRAM and high-bandwidth memory due to AI devices, which benefits their advanced packaging business (about 30% of advanced packaging business), including products like VeraFlex IV.

    What went wrong

    • NVMI's growth could be hindered by a potential slowdown in Wafer Fab Equipment (WFE) growth, as consensus estimates have decreased from mid-teens to high single-digit growth for next year, making it challenging to maintain their projected outperformance.
    • Significant exposure to the Chinese market poses risks due to potential regulatory and geopolitical issues, especially as industry peers are reducing their China exposure while NVMI continues to report robust demand from China into 2025.
    • Potential delays or issues with customers adopting gate-all-around technology could impact NVMI's projected revenue of $500 million by 2026 from this segment, as some customers are facing challenges, and any slowdown could affect NVMI's growth trajectory.

    Q&A Summary

    1. Gate-All-Around Revenue Outlook
      Q: Is the $500M gate-all-around revenue target by 2026 still on track?
      A: Yes, we remain confident in achieving $500 million in gate-all-around revenue by the end of 2026, with no material change to our estimate despite customer issues. We expect gate-all-around to ramp next year, adding about 30% to process steps, presenting a significant opportunity for us.

    2. China Demand Expectations
      Q: What are your expectations for China demand into 2025?
      A: We see continued demand and robust business in China entering 2025. While the faster growth in advanced nodes will result in a moderation of China's share in our overall product sales, we are within the range of our peers and still see strong demand.

    3. WFE Growth and Outperformance
      Q: Given lower WFE growth estimates, will you still outperform next year?
      A: Historically, we model Nova's outperformance over WFE at a ratio of 1.5, and we definitely see this continuing. While it's difficult to anticipate actual WFE growth, we can say it will be higher than in 2024.

    4. Memory Market Opportunities
      Q: What investments in memory are benefiting you?
      A: We see demand from DRAM, with strong demand for high-bandwidth memory making up about 30% of our advanced packaging business. DRAM demand, fueled by AI devices, should grow more in the first half of next year. NAND is expected to see growth and recovery in the second half of next year.

    5. U.S. IDM Customer Update
      Q: Any impact from issues at the leading U.S. IDM customer?
      A: While we can't address a specific customer, we are working closely with all gate-all-around customers globally. We don't see major changes in orders or plans going forward. Our METRION platform will be evaluated by three leading memory and logic manufacturers by year's end, reinforcing our confidence in supporting gate-all-around manufacturers.

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