(Reuters) - Applied Materials Inc AMAT.O, the world's largest supplier of tools used to make semiconductors, reported a better-than-expected quarterly profit helped by strong growth in its semiconductor and display businesses.

Applied Materials’ new corporate signage photo in Santa Clara, California, U.S. is shown in this image released on August 22, 2016. Courtesy Applied Materials/Handout via REUTERS

Shares of the company rose 4.2 percent to $44.95 in extended trading on Thursday.

Applied Materials, whose results are seen as the bellwether for the chip industry, has been benefiting from higher demand for 3D NAND memory chips from smartphone makers and the shift to organic light-emitting diode technology for displays.

Revenue from its semiconductor business, the company’s largest, rose 41.8 percent to $2.53 billion, in line with analysts’ estimates, according to financial data and analytics firm FactSet.

“Broader product portfolio in a growing spending environment for both semis and display is enabling solid revenue and earnings growth,” Jagadish Iyer analyst at Summit Redstone Partners said.

In August, analysts at Gartner Inc forecast worldwide semiconductor capital spending to increase 10.2 percent in 2017, to $77.7 billion mostly driven by continued aggressive investment in memory chips. (gtnr.it/2wUlzI2)

Revenue from Applied Materials’ display business — which makes displays for televisions, PCs and smartphones — rose nearly 31 percent to $410 million beating estimates of $402.4 million, according to FactSet.

“Pervasive demand for electronics means that our markets are getting larger and substantially less cyclical,” Chief Executive Gary Dickerson said on a post-earnings call.

The company forecast fourth-quarter adjusted profit of 86- 94 cents per share and net sales of $3.85 billion to $4 billion.

Analysts on average had expected a fourth-quarter profit of 82 cents and revenue of $3.71 billion, according to Thomson Reuters I/B/E/S.

Net income rose to $925 million, or 85 cents per share, in the third quarter ended July 30, from $505 million, or 46 cents per share, a year earlier.

Excluding items, the company earned 86 cents per share. Total net sales rose 32.7 percent to $3.74 billion.

Analysts on average had expected the company to earn 84 cents per share on revenue of $3.69 billion.