AMAT Earnings Recap
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Applied Materials' record results and raised outlook underscore the accelerating AI infrastructure buildout, with leading-edge logic, DRAM, and advanced packaging driving >80% of WFE growth. The company's capacity expansion plans and customer visibility extending to 2030 signal sustained multiyear demand for AI compute infrastructure.
Applied Materials delivered record revenue of $9.1B, up 15% sequentially and 25% YoY, with record EPS of $3.50. Semiconductor Systems revenue was a record $7.0B, up 18% sequentially, driven by foundry logic and DRAM (up 52% YoY). AGS revenue was a record $1.8B, up 22% YoY. The company announced six new products, including Sentura Prime epitaxy, producer Avila, Dakota VMAX, OptiQuad CMP, and two e-beam systems. They also announced new EPIC partnerships with Broadcom, SCREEN, and UC Berkeley, bringing total EPIC engagements to 11.
Management raised its calendar 2026 revenue growth outlook again, now expecting semiconductor systems growth greater than the previously stated >30% and overall company growth faster than the market. They guided Q4 FY2026 revenue to $10.25B ± $500M (up 51% YoY) and non-GAAP EPS to $4.02 ± $0.20 (up 85% YoY). They expect strong second-half growth in DRAM, leading-edge foundry logic, and advanced packaging, with packaging revenue growing >70% in calendar 2026. They see 2027 as another strong growth year, driven by clean room availability and customer visibility extending to 2030. Gross margins are expected to continue to expand, with Q4 gross margin guided at ~50.4%, and they plan to double quarterly system output by 2028.
“In the past 3 months, we have again made upward revisions to our revenue growth forecast for the year and we are confident we will grow faster than the overall market.”
on Revenue growth outlook
“Customers continue to give us longer visibility than we have ever had, with some conversations now extending to 2030.”
on Customer visibility
“We are now taking this further hiring and training new manufacturing and customer support teams, so that we have the capacity to double our quarterly system output from current levels by 2028.”
on Capacity expansion
A quarter ago, you quantified semi systems growth of 30-plus percent. Curious if there is kind of framework for thinking about what the growth outlook looks like now, given your positive commentary. And is there any sort of framework that we should be thinking about into calendar 27?
Brice said demand strengthened again during the quarter, with new projects and higher CapEx forecasts. They now expect growth greater than the >30% highlighted last quarter. Gary added that leading-edge foundry logic, DRAM, and advanced packaging represent ~80% of WFE growth, and they expect to gain share.
Why are you guiding gross margins flat at current levels despite a sizable revenue increase? Is it just display growth or something else?
Brice said display growth is a factor, but the main headwind is ramp costs from hiring many customer service engineers and adding resources in the semi business. He expects gross margins to improve slowly over the longer term as revenue growth continues.
Would you commit to growing systems 40% or more? And does doubling manufacturing capacity by 2028 imply $14B revenue in calendar 2028?
Brice said they expect to outgrow the market, but did not commit to a specific number. He clarified that doubling capacity is not a revenue forecast for 2028; it's about having clean room and supply chain readiness to support a wide range of demand scenarios.