Applied Materials Inc. (AMAT), the largest producer of chip-making equipment, reported a sharply higher quarterly profit Wednesday on stronger demand for advanced manufacturing tools, and said new orders came in ahead of expectations.

Earnings in the fiscal fourth quarter ended Oct. 31 were $455 million, or 27 cents a share, compared to a year-earlier profit of $15.5 million, or 1 cent a share. Net sales rose to $2.20 billion from $1.22 billion in the same quarter last year. The results were in line with analyst estimates.

New orders, an indicator of future revenue, rose 7 percent from the fiscal third quarter to $2.62 billion, ahead of the company's target of 5 percent.

Applied's customers became more cautious over the last three months in response to swelling inventories of unsold chips, Chief Executive Michael Splinter said in a statement. He added, however, that the Santa Clara, Calif.-based company was able to gain market share, and that chip makers would still make big investments in advanced chip-making tools.

"There was nothing negative in the release, and some people had expected orders to be down," said Suresh Balaraman, an analyst with ThinkEquity Partners.

Analysts on average had been expecting earnings of 26 cents a share on net sales of $2.29 billion, according to Reuters Estimates.

Shares of Applied Materials rose 58 cents, or 3.5 percent, to $17.34 on Nasdaq (search). In after-hours trading, the shares were up to $17.47.