Applied Materials (AMAT) shares jumped 3% in after-hours trading Thursday after the chip-equipment maker posted record quarterly revenue and profit, and issued a bullish outlook for the current period, fueled by surging demand from artificial intelligence applications.
The Santa Clara, California-based company reported fiscal second-quarter revenue of $7.91 billion, topping the $7.65 billion consensus estimate from analysts polled by LSEG. Adjusted earnings came in at $2.86 per share, also above the $2.66 expected. Revenue rose 11% from a year ago, while GAAP net income jumped 31% to $2.81 billion.
For the fiscal third quarter, Applied Materials forecast revenue of approximately $8.95 billion, plus or minus $500 million, well ahead of the $8.09 billion Wall Street had anticipated. Adjusted earnings are expected around $3.36 per share, plus or minus 20 cents, compared to the $2.88 estimate.
The strong results and guidance underscore that the AI boom is not just benefiting chip designers like Nvidia (NVDA) and cloud giants, but also the specialized equipment makers that produce the advanced tools needed to manufacture cutting-edge semiconductors. Applied Materials' wafer fabrication equipment is critical for depositing, etching, and shaping materials at the microscopic level on silicon wafers.
CEO Gary Dickerson called it a “record quarterly performance” and said the company now expects its semiconductor equipment segment to grow by more than 30% in calendar 2026. CFO Brice Hill noted that AI demand is “now in full force,” prompting the company to ramp up build plans, inventory, and logistics.
Applied Materials’ semiconductor systems unit generated $5.97 billion in quarterly revenue, with DRAM memory sales accounting for 29% of that total. The company highlighted that AI requires advanced logic chips, larger DRAM pools, and higher-spec packaging to link chips and memory for improved performance and energy efficiency.
Industry data from SEMI projects global 300mm fab equipment spending will climb 18% in 2026 to $133 billion, and another 14% in 2027 to $151 billion. “AI is resetting the scale of semiconductor manufacturing investment,” said SEMI CEO Ajit Manocha.
However, risks remain. China accounted for 24% of Applied Materials’ semiconductor systems and services revenue last quarter. The company cited potential headwinds from demand swings, trade policy shifts, export restrictions, tariffs, and geopolitical tensions. Free cash flow fell sharply to $210 million from $1.06 billion a year ago, as capital spending increased.
Despite these challenges, Dickerson noted that key customers are now providing rolling eight-quarter forecasts, offering greater visibility than typical for the cyclical semiconductor industry. This extended planning horizon gives Applied Materials more flexibility, but also raises expectations that the AI spending surge will continue to deliver.
