Overview
Since the Report + 0.8%
Revenue grew 53.1% year over year, EPS beat the estimate by 2.5%; the stock rose 0.8% in its first reaction.
- RevenueQ4
- $10.41B
- ▲ 53% YoY · Beat Estimate by 1.1%
- EPSAdjusted
- $4.16
- Estimate $4.06 · Beat by 2.5%
Verdict
HOLDApplied Materials grew fourth-quarter revenue 53% to a record $10.41 billion, but revenue beat expectations by only 1.1%. The stock rose 0.8% after hours; the midpoint of first-quarter revenue guidance came in 1.9% above expectations. The next thing to watch is whether memory's rising share keeps climbing.
Close on Report DayNov 12
$380.95▲ 0.8%Report-Day Move
- Market Cap(Today)
- ≈ $305 B
- 1Y Return(At Report)
- + 65%
- P/E(At Today's Price · $12.90 · Trailing 12M)
- 29.8
- Net Margin(Trailing 12M)
- 30.1%
Earnings Summary
In 30 Seconds- Revenue rose 53% to a record $10.41 billion, beating expectations by 1.1%, while EPS beat by 2.5%.
- DRAM's share of Semiconductor Systems revenue rose from 28% to 33% in a year.
- The stock rose 0.8% after hours after first-quarter guidance landed in line with expectations.
The Numbers
Adjusted Gross Margin
50.6%
Year Ago 48.1% · Up 2.5 Points
Adjusted Operating Margin
35.3%
Year Ago 28.6% · Up 6.7 Points
Operating Cash Flow
$3.30B
Record · Free Cash Flow $2.62B
Stock Reaction
▲ 0.8%
After Hours 4:40 P.m. ET · Not Settled
Quarterly Revenue ($ Billion)
6.80
Q4 25 · $6.80 B
7.01
Q1 26 · $7.01 B · QoQ + 3.1%
7.91
Q2 26 · $7.91 B · QoQ + 12.8%
9.12
Q3 26 · $9.12 B · QoQ + 15.2%
10.41
Q4 26 · $10.4 B · QoQ + 14.2% · YoY + 53.1%
10.6–11.6
Q1 27E · 10.6–11.6 · QoQ + 6.6% · YoY + 58.3%
- Q4 25
- Q1 26
- Q2 26
- Q3 26
- Q4 26
- Q1 27E
Q1 FY27 Company Guidance
- Revenue (Q1)10.6 – 11.6 billion10.6 billion11.6 billion
Midpoint 11.1 · Market Expectation 10.89. Earnings-call Details Will Be Added Tonight.1.9% Above Estimate ▲
- Adjusted EPS (Q1)4.15 – 4.55 $4.15 $4.55 $
Midpoint 4.35 · Market Expectation 4.242.6% Above Estimate ▲
How to Read the Chart
The blue band is the company's low-high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. When the company gave a single number rather than a range and no market expectation is known, that row gets no band at all: there is no length to measure and no position to compare. Axis is ±5.3% around the midpoint.
Segment and KPI Data
Revenue by Segment
- Semiconductor Systems$8.00 BShare 76.8%
- Applied Global Services$1.90 BShare 18.2%
- Other (Incl. Display)$517 MShare 5.0%
Key Metrics
Free Cash Flow
$2.62 B
Press Release
Share Buybacks
$2.00 B
Press Release
China Share of Revenue
25.0%
Press Release
DRAM Share of Systems Revenue
33.0%
Press Release
Shares are computed over the segment total: $10.4 B. Source: Press Release.
Metrics come only from the company's own filings; each one names the document it was taken from.
“Applied Materials delivered record results in fiscal 2026, and we are on track to grow our Semiconductor Systems business more than 40 percent in our calendar 2026. AI continues to fuel strong incremental demand for semiconductors and Applied has built the most-enabling portfolio to advance the AI-computing roadmap, putting us in a great position for multi-year revenue and profit growth.”
- Record Fiscal Year
- 40%+ Semiconductor Systems Growth
- AI-computing Roadmap
Summary and Review
Summary
Applied Materials reported fourth-quarter revenue of $10.41 billion. A year ago it was $6.80 billion, an increase of 53%. Revenue beat the $10.30 billion market expectation by 1.1%. Adjusted EPS was $4.16, 2.5% above the $4.06 estimate. GAAP EPS rose 43% to $3.40. The midpoint of first-quarter revenue guidance is $11.1 billion, 1.9% above expectations. The profit gate is open; the revenue and guidance gates are in line.
The stock closed the regular session down 3.6% at $380.95. After hours it was up 0.8% as of 4:40 p.m. ET; the price has not settled yet. In after-hours trading the price swung between $373 and $394. The market read this report as a confirmation, not a surprise. Record revenue and record cash flow arrived. But guidance did not land clearly above expectations. The stock had gained 65.1% over 12 months, so the bar was high.
Our score is 63 and our view is hold. One gate is open and two are in line, which maps to the 50-64 band. The quarter is not weak: adjusted gross margin widened 2.5 points in a year. But revenue and guidance did not beat expectations by more than 2%. This analysis uses the figures in the press release; earnings-call details will be added tonight. The score grades the quarter, not the stock. This is a report card on the quarter, not a stock recommendation.
Full Review
Semiconductor Systems drives growth.
Semiconductor Systems revenue was $8.00 billion. A year ago it was $4.88 billion, an increase of about 64%. The segment makes up 77% of total revenue. Its operating margin rose from 29.3% to 38.8% in a year. Segment operating profit was about $3.10 billion. Applied Global Services revenue was $1.90 billion, up about 26%. That segment's operating margin was 30.5%. Services make up 18% of total revenue, down from 22% a year ago. Other businesses, including Display, brought in $517 million of revenue. But this line posted a $21 million operating loss. Most of the growth comes from chipmakers buying new equipment. Steady growth in services shows the installed base of equipment is expanding. That revenue is less exposed to the cycle.
Memory's share is rising.
DRAM made up 33% of Semiconductor Systems revenue. A year ago the share was 28%. NAND flash rose from 6% to 9%. That lifts memory's weight in systems revenue to 42%. The foundry and logic share fell from 66% to 58%. In dollars, DRAM revenue was about $2.64 billion. A year ago it was about $1.37 billion. Flash revenue also rose, from about $290 million to $720 million. Memory makers are adding capacity for the HBM that AI chips need. This is how AI demand shows up on the equipment side. The lower logic share does not mean logic revenue fell. Foundry and logic revenue also rose, from about $3.22 billion to $4.64 billion. Growth is continuing on both fronts.
Margin and cash at records.
Adjusted gross margin was 50.6%. A year ago it was 48.1%, an expansion of 2.5 points. Last quarter it was 50.4%, a sequential gain of 0.2 points. Adjusted operating margin was 35.3%, 6.7 points above 28.6% a year ago. Operating cash flow was a record $3.30 billion. Free cash flow was $2.62 billion. The company turned about 25 cents of every revenue dollar into free cash. Full-year free cash flow was $6.20 billion. The company bought back $2.0 billion of stock and paid $421 million in dividends in the quarter. For full fiscal 2026, revenue rose 21% to $34.45 billion. Adjusted EPS rose 37% to $12.89. Cash returned to shareholders for the year totaled $4.75 billion.
China share falls, guidance at the edge.
China's share of revenue fell to 25%. A year ago it was 29%. In dollars, China revenue rose from $1.96 billion to $2.64 billion, up about 35%. The share fell because Taiwan and Korea grew faster. Taiwan moved ahead with 28% and Korea with 17%. The US took 13% and Japan 6%. Revenue is concentrated in Asia. First-quarter revenue guidance is $10.6-11.6 billion. The $11.1 billion midpoint is 1.9% above the $10.89 billion expectation. Adjusted EPS guidance is $4.15-4.55. The $4.35 midpoint is 2.6% above the $4.24 estimate. Last quarter's list of expected developments included a target of more than 40% Semiconductor Systems growth in calendar 2026. The release confirmed that target.
Next quarter, watch DRAM's share.
Next quarter, look at a single line: DRAM's share of Semiconductor Systems revenue. This quarter it was 33%. If it stays above 30%, the memory investment cycle is continuing. If it falls below 30%, growth leans on logic chips again. The second measure is where revenue lands in the guidance range. Clearing the $11.1 billion midpoint by a wide margin would mean another clear beat. Landing below the midpoint would mean this quarter's growth rate was close to the peak. The third signal is China's share. Staying below 25% reduces the weight of export-restriction risk on revenue. If all three improve together, next quarter will deliver a stronger report card.
Looking Ahead
Strengths and Risks
5 Strengths · 4 RisksStrengths
5- Revenue rose 53% year over year to a record $10.41 billion.
- Adjusted EPS rose 92% to $4.16 and beat expectations by 2.5%.
- Adjusted operating margin widened 6.7 points in a year to 35.3%.
- Operating cash flow hit a record $3.30 billion, with free cash flow of $2.62 billion.
- The company confirmed its target of more than 40% Semiconductor Systems growth in calendar 2026.
Risks
4- Revenue beat expectations by only 1.1%, a narrower surprise.
- The midpoint of first-quarter revenue guidance is only 1.9% above expectations.
- China still accounts for 25% of revenue and is exposed to export restrictions.
- Other businesses, including Display, posted a $21 million operating loss in the quarter.
What to Watch
3- Q1 FY27 earnings will be reported in February 2027.
- Management's signal on calendar 2027 equipment demand will be watched.
- Possible new export-restriction decisions targeting China will be watched.
Upcoming Earnings
To Understand This