AMAT

Synopsys, Inc. SNPS reported third-quarter fiscal 2026 non-GAAP earnings of $3.91 per share, which increased 15.3% year over year and beat the Zacks Consensus Estimate by 6.5%. Broad-based strength, led by EDA and Ansys, supported the earnings outperformance. Revenues rose 42.4% year over year to $2.48 billion, topping the consensus mark by 1.7%. Backlog remained strong at $10.9 billion, while Design IP returned to year-over-year growth. Time-based product revenues were $1 billion, which increased 12.4% from the year-ago quarter. Upfront product revenues increased 28.8% to $665.2 million, reflecting higher product contributions during the quarter. Maintenance and service revenues surged 144.4% year over year to $808.8 million. Ansys contributed approximately $711 million to total quarterly revenues. Synopsys, Inc. price-consensus-eps-surprise-chart | Synopsys, Inc. Quote Design Automation revenues were $2 billion, which increased 52.7% year over year, accounting for 80.9% of total revenues. Within the segment, EDA revenues increased 8.5%, supported by robust software performance and record hardware-assisted verification revenues. Design IP revenues rose 10.8% to $473.8 million and represented 19.1% of revenues. Management cited broad AI infrastructure demand, including strength in interface, memory and die-to-die IP. The company said its die-to-die business is on pace to double year over year and has surpassed 100 cumulative design wins. The non-GAAP operating margin was 41.6% in the quarter. Design Automation’s adjusted operating margin expanded to 45.2% from 44.5% a year ago, while the Design IP adjusted margin improved to 26.5% from 20.1%. Total non-GAAP costs and expenses were $1.45 billion, landing at the lower end of management’s guided range. Synopsys credited operational efficiency and Ansys cost synergies that are running ahead of schedule. Free cash flow was $746 million in the third quarter. For the first nine months of fiscal 2026, net cash provided by operating activities totaled $2.30 billion. Synopsys ended the third quarter with $3.61 billion in cash, cash equivalents and short-term investments. Total debt was about $10 billion after the company repaid term loans earlier than planned. Management highlighted AI-driven design complexity as a key demand driver across the portfolio. More than 30 customer engagements are underway for Synopsys’ agentic AI platform, which is designed to automate engineering workflows while increasing use of the company’s underlying EDA tools. Synopsys also launched Multiphysics Fusion, its first joint Synopsys-Ansys solution. Early customer validations showed up to 10 times faster design closure and three times faster runtime. Management expects these add-on capabilities to begin contributing to EDA growth in fiscal 2027. Synopsys raised its fiscal 2026 revenue guidance to $9.69-$9.74 billion, with the midpoint up $50 million. The company expects Ansys to contribute about $2.98 billion, up $20 million from its previous outlook, and continues to expect Design IP revenues to grow sequentially in the fourth quarter. The company lifted its fiscal 2026 non-GAAP earnings guidance to $15.04-$15.10 per share, a 31-cent increase at the midpoint from the prior forecast. Non-GAAP operating margin is now projected at about 41.5% at the midpoint, up 50 basis points from the previous guidance. For the fourth quarter, SNPS projects revenues of $2.53-$2.58 billion and non-GAAP earnings of $4.10-$4.16 per share. Management expects EDA revenue growth to accelerate to double digits in the fourth quarter and for fiscal 2026. Currently, SNPS carries a Zacks Rank #3 (Hold). Some better-ranked stocks worth considering in the broader Zacks Computer and Technology sector are Applied Materials AMAT, Lam Research LRCX and Palo Alto Networks PANW, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 earnings is pegged at $12.73 per share, up by 4.9% over the past 30 days, indicating a year-over-year surge of 35.1%. Applied Materials shares have surged 87.5% year to date (YTD). The Zacks Consensus Estimate for Lam Research’s fiscal 2027 earnings has moved northward by 17.8% to $9.32 per share over the past 30 days and calls for a year-over-year jump of 60.4%. Lam Research shares have soared 83.8% YTD. The Zacks Consensus Estimate for Palo Alto Networks’ fiscal 2026 earnings has remained unchanged at $3.78 per share, over the past 30 days, implying a year-over-year increase of 13.2%. Palo Alto Networks shares have risen 94.1% YTD. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Synopsys, Inc. (SNPS) : Free Stock Analysis Report Lam Research Corporation (LRCX) : Free Stock Analysis Report Applied Materials, Inc. (AMAT) : Free Stock Analysis Report Palo Alto Networks, Inc. (PANW) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

NVIDIA Corporation NVDA delivered another strong quarterly performance as AI infrastructure demand lifted second-quarter fiscal 2027 results above expectations. Non-GAAP earnings of $2.22 per share for the second quarter rose 120% year over year and beat the Zacks Consensus Estimate by 6.22%. Revenues surged 106% year over year to $96.22 billion and surpassed the consensus mark by 4.82%. The robust performance at the Data Center segment mainly drove the overall top-line growth. NVIDIA has surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 5.82%. NVIDIA Corporation price-consensus-eps-surprise-chart | NVIDIA Corporation Quote Data Center revenues jumped 117% year over year and 18% sequentially to $89.02 billion, with Blackwell Ultra infrastructure driving the record performance. Within the Data Center segment, Hyperscale revenues climbed 102% year over year and 13% sequentially to $48.71 billion, supported by Blackwell Ultra demand. AI Clouds, Industrial and Enterprise revenues advanced 138% year over year and 25% sequentially to $40.31 billion. Growth reflected demand from AI natives, enterprises and sovereign customers, along with hyperscalers using AI clouds. China Hopper shipments were less than 1% of Data Center revenues. Management expects NeoCloud partners to exit 2026 with 8 gigawatts of installed capacity, up from roughly 3 gigawatts at the end of 2025. Compute & Networking revenues were $88.3 billion, up 114% year over year and 18% sequentially. The performance reflected the continued scale-up of accelerated computing infrastructure and networking alongside the Blackwell ramp-up. Networking revenues also grew 18% sequentially, while Spectrum-X Ethernet revenues increased 2.6 times year over year. Graphics revenues rose 46% year over year and 12% sequentially to $7.92 billion. Edge Computing revenues increased 27% year over year and 13% sequentially to $7.20 billion, driven by Blackwell workstation sales, partly offset by softer consumer PC sales amid elevated memory and system prices. Non-GAAP gross margin was 75%, up 250 basis points from the year-ago quarter and flat sequentially. The year-over-year improvement reflected a better mix from Blackwell Ultra, while Blackwell architecture remained the vast majority of revenues. Non-GAAP operating expenses increased 54% year over year and 11% sequentially to $8.23 billion. Higher compute infrastructure and compensation and benefits costs drove the increase. Non-GAAP operating income rose 124% year over year to $63.96 billion. In the second quarter, the company generated operating cash flow of $24.08 billion and free cash flow of $21.34 billion. In the first half of fiscal 2027, it generated operating and free cash flows of $74.42 billion and $69.9 billion, respectively. NVIDIA returned approximately $25.78 billion to shareholders through repurchases and dividends during the quarter and $45.33 billion during the first half of fiscal 2027. Inventory increased sequentially to $31.58 billion in the second quarter as the company prepared for the Vera Rubin introduction. Supply and capacity commitments climbed to $279 billion from $119 billion in the prior quarter, primarily reflecting memory procurement needed to support demand over the next several years. At the end of the second quarter, cash, cash equivalents and marketable debt securities totaled $56.6 billion. Accounts receivable reached $63.1 billion, while days sales outstanding rose to 60 days from 45 days sequentially due to extended payment terms on large, multi-quarter agreements with certain investment-grade customers. NVIDIA also issued $25 billion of senior unsecured notes for general corporate purposes. Separately, maximum gross exposure from land, power and shell guarantees, including the SB Energy guarantees signed in August 2026, totaled $108.5 billion. For the third quarter of fiscal 2027, NVIDIA expects revenues of $108 billion, plus or minus 2%. The guidance assumes no Data Center compute revenues from China. Management expects Vera Rubin to represent about 20% of Data Center revenues in the quarter. Non-GAAP gross margin is projected at 74%, plus or minus 50 basis points, while non-GAAP operating expenses are expected to be about $9 billion. Management also expects fiscal 2028 revenues to grow approximately 70%, with supply remaining a bottleneck through at least the end of that year. NVIDIA currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks worth considering in the broader Zacks Computer and Technology sector are Applied Materials AMAT, Lam Research LRCX and Palo Alto Networks PANW, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 earnings is pegged at $12.73 per share, up by 4.9% over the past 30 days, indicating a year-over-year rise of 35.1%. Applied Materials shares have surged 87.5% year to date (YTD). The Zacks Consensus Estimate for Lam Research’s fiscal 2027 earnings has moved northward by 17.8% to $9.32 per share over the past 30 days and calls for a year-over-year jump of 60.4%. Lam Research shares have soared 83.8% YTD. The Zacks Consensus Estimate for Palo Alto Networks’ fiscal 2026 earnings has remained unchanged at $3.78 per share over the past 30 days, implying a year-over-year increase of 13.2%. Palo Alto Networks shares have rallied 94.1% YTD. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NVIDIA Corporation (NVDA) : Free Stock Analysis Report Lam Research Corporation (LRCX) : Free Stock Analysis Report Applied Materials, Inc. (AMAT) : Free Stock Analysis Report Palo Alto Networks, Inc. (PANW) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

CrowdStrike Holdings, Inc. CRWD reported non-GAAP earnings of 31 cents per share for the second quarter of fiscal 2027, surpassing the Zacks Consensus Estimate by 6.9%. The bottom line increased 34.8% year over year. Revenues of $1.47 billion beat the consensus estimate by 2.2% and increased 25.8% year over year. Record net new annual recurring revenue (ARR), with accelerating Falcon Flex adoption and AI-security demand, supported the quarter. Subscription revenues increased 27% year over year to $1.4 billion. Professional services revenues rose 7% to $70.61 million. Management said international revenue growth accelerated for the fifth consecutive quarter. The geographic revenue mix was approximately 65% from the United States and 35% from international markets. CrowdStrike price-consensus-eps-surprise-chart | CrowdStrike Quote Ending ARR reached $5.84 billion, up more than 25% year over year. Net new ARR hit a record $333 million and increased 51% from the year-ago period. New-logo net new ARR also reached an all-time high, while dollar-based gross and net retention improved sequentially. Falcon Flex remained a major expansion engine. Ending ARR from Flex accounts surpassed $2.29 billion, up 101% year over year. The company had more than 2,900 Flex customers and over 630 customers that had re-Flexed as of quarter-end. Customers converting from standard subscriptions to Flex delivered an average ending ARR uplift of more than 40%. Cloud Security ending ARR exceeded $905 million and grew more than 29% year over year. Next-Gen SIEM ending ARR surpassed $695 million, up more than 60%, while Next-Gen Identity exceeded $585 million and grew more than 33%. Together, these businesses generated record second-quarter net new ARR. AI Detection and Response, or AIDR, also gained traction, with ending ARR nearly tripling sequentially. CrowdStrike said customers are increasingly deploying AI while seeking visibility, data protection and identity controls around AI agents. Subscription customer adoption reached 51% for six or more modules, 35% for seven or more and 26% for eight or more. Non-GAAP subscription gross profit increased 28.4% year over year to $1.14 billion. The corresponding margin expanded to 81% from 80%. Total non-GAAP gross margin was 79% compared with 78% a year earlier. Non-GAAP operating income surged 45.8% to $371.65 million, while the operating margin expanded to 25% from 22%. Non-GAAP sales and marketing expenses rose 13.3% to $412.87 million, research and development expenses increased 31.1% to $284.79 million, and general and administrative expenses grew 24% to $87.89 million. Cash and cash equivalents totaled $5.01 billion as of July 31, 2026. CrowdStrike generated $530.3 million in cash from operations, up 59.3% year over year. Free cash flow increased 33.1% to $377.4 million and represented 26% of revenues. For the third quarter of fiscal 2027, CRWD expects revenues between $1.52 billion and $1.53 billion. ARR is projected between $6.184 billion and $6.188 billion, while non-GAAP earnings are expected to be approximately 31 cents per share. For fiscal 2027, revenues are now projected between $5.991 billion and $6.011 billion, with ARR of $6.603 billion to $6.612 billion. Non-GAAP earnings per share are expected between $1.25 and $1.26. Management raised its full-year net new ARR growth outlook by 630 basis points to 34% at the midpoint, supported by record pipeline and continued Falcon Flex momentum. Currently, CRWD carries a Zacks Rank #3 (Hold). Some better-ranked stocks worth considering in the broader Zacks Computer and Technology sector are Applied Materials AMAT, Lam Research LRCX and Palo Alto Networks PANW, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 earnings is pegged at $12.73 per share, up by 4.9% over the past 30 days, indicating a year-over-year increase of 35.1%. Applied Materials shares have surged 87.5% year to date (YTD). The Zacks Consensus Estimate for Lam Research’s fiscal 2027 earnings has moved northward by 17.8% to $9.32 per share over the past 30 days and calls for a year-over-year jump of 60.4%. Lam Research shares have soared 83.8% YTD. The Zacks Consensus Estimate for Palo Alto Networks’ fiscal 2026 earnings has remained unchanged at $3.78 per share over the past 30 days, implying a year-over-year increase of 13.2%. Palo Alto Networks shares have rallied 94.1% YTD. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CrowdStrike (CRWD) : Free Stock Analysis Report Lam Research Corporation (LRCX) : Free Stock Analysis Report Applied Materials, Inc. (AMAT) : Free Stock Analysis Report Palo Alto Networks, Inc. (PANW) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Semtech Corporation SMTC shares gained 4% during Tuesday’s extended trading session after the company reported better-than-expected second-quarter fiscal 2027 results. Semtech posted non-GAAP earnings of 71 cents per share, which beat the Zacks Consensus Estimate by 14.5%. The bottom line exceeded management’s guidance of 61 cents (+/-2 cents) and reflected a robust year-over-year improvement of approximately 73.2%. Semtech beat on earnings in each of the trailing four quarters, the average surprise being 9.8%. SMTC’s second-quarter fiscal 2027 revenues of $341.9 million topped the Zacks Consensus Estimate by 4.1% and came above management’s guidance of $328 million (+/- $5 million). The top line jumped 32.7% year over year. Semtech Corporation price-consensus-eps-surprise-chart | Semtech Corporation Quote Sales from the infrastructure market totaled $123.7 million (36.2% of net sales), exhibiting year-over-year growth of 69%, supported by the expanding data center business. The increase reflected continued strength in 800G products and the early ramp of 1.6T FiberEdge and CopperEdge solutions. Sales from the industrial market amounted to $178.9 million (52.3% of net sales), up 25.1% year over year. Sales from the high-end consumer market totaled $39.2 million (11.5% of net sales), down 4.6% year over year. Signal Integrity (36.9% of net sales) sales totaled $126.2 million, up 64.3% year over year. Analog Mixed Signal & Wireless (34.3% of net sales) sales amounted to $117.4 million, which rose 27.6% year over year. IoT System and Connectivity (28.8% of net sales) sales totaled $98.3 million, up 10.7% on a year-over-year basis. FiberEdge demand remained strong across leading hyperscalers, and Semtech said it is designed into every major module provider in its target markets. The company expects 1.6T FiberEdge market share to exceed 50% by the end of fiscal 2027 and is engaged in CopperEdge design-ins at bandwidths up to 3.2T. LoRa-enabled sales set another record at $58 million, up 58% year over year. The company cited expansion across smart utilities, buildings, cities and asset management, while Amazon Sidewalk is expanding internationally after Ring's U.S. launch of LoRa-based sensors. Semtech is also expanding photonics capacity, with high-power CW laser revenues expected to begin in the first half of fiscal 2028. The non-GAAP gross margin of 54.5% expanded 130 basis points (bps) on a year-over-year basis and 150 bps sequentially. Non-GAAP operating income increased 72% year over year to $83.6 million. The non-GAAP operating margin expanded to 24.4% from 18.8% reported in the year-ago quarter. On a quarter-over-quarter basis, non-GAAP operating income increased 41%, while margin expanded 400 basis points. As of July 26, 2026, cash and cash equivalents totaled $204.1 million, up from $163.3 million as of April 26, 2026. The long-term debt amounted to $394.4 million, down from the previous quarter’s reported figure of $492 million. During the second quarter, Semtech generated operating cash flow and free cash flow of $68.9 million and $61.4 million, respectively. For the third quarter of fiscal 2027, Semtech expects net sales to be $410 million (+/- $5 million). The Zacks Consensus Estimate is pegged at $357.1 million, indicating a year-over-year rise of 33.7%. The non-GAAP gross margin is expected to be 58.3% (+/- 100 bps). The non-GAAP operating margin is anticipated to be 31% (+/- 60 bps). Non-GAAP earnings are expected to be $1.05 (+/- 3 cents) per share. The consensus mark for earnings is pegged at 73 cents per share, indicating a year-over-year rise of 52.1%. Currently, Semtech carries a Zacks Rank #2 (Buy). Some other top-ranked stocks worth considering in the broader Zacks Computer and Technology sector are Applied Materials AMAT, Lam Research LRCX and NVIDIA NVDA, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 earnings is pegged at $12.73 per share, up 8 cents over the past seven days, indicating a year-over-year surge of 35.1%. Applied Materials shares have surged 86.7% year to date (YTD). The Zacks Consensus Estimate for Lam Research’s fiscal 2027 earnings has moved northward by 17.8% to $9.32 per share over the past 30 days and calls for a year-over-year jump of 60.4%. Lam Research shares have soared 83.8% YTD. The Zacks Consensus Estimate for NVIDIA’s fiscal 2027 earnings has moved upward by 2 cents to $8.92 per share in the past seven days, implying a year-over-year increase of 87%. NVIDIA shares have risen 14.6% YTD. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Semtech Corporation (SMTC) : Free Stock Analysis Report NVIDIA Corporation (NVDA) : Free Stock Analysis Report Lam Research Corporation (LRCX) : Free Stock Analysis Report Applied Materials, Inc. (AMAT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Image source: The Motley Fool. Thursday, Aug. 13, 2026 at 4:30 p.m. ET Corporate Vice President of Investor Relations - Michael Sullivan President and CEO - Gary E. Dickerson chief financial officer - Brice A. Hill Operator: Welcome to the Applied Materials Third Quarter of Fiscal 26 Earnings Call. During the presentation, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question-and-answer session. I would now like to turn the call over to Mike Sullivan, Corporate Vice President of Investor Relations. Please go ahead. Michael Sullivan: Good afternoon, everyone, and thank you for joining today's call. With me are Gary E. Dickerson, our President and CEO, and Brice A. Hill, our chief financial officer. Before we begin, I would like to remind you that today's call includes forward looking statements which are subject to risks and uncertainties that could cause our actual results to differ. Information concerning these risks and uncertainties is discussed in our most recent form 10 Q and other filings with the SEC. Today's call also includes non GAAP financial measures. Reconciliations to GAAP measures can be found in today's earnings press release and in our quarterly earnings materials, which are available on our website at ir.appliedmaterials.com. In addition, any comments regarding calendar 2026 refer to Q2 of this fiscal year through Q1 of fiscal 27 which will be a 14-week quarter. Next, I would like to remind you about our 2 special events during SemiCon West. On Monday afternoon, October 12th, we will host an unveiling of the new epic center in Silicon Valley, California. And on Tuesday morning, October 13th, we hope you will join Gary, Brice, and our business-unit leaders unit leaders for our investor breakfast presentation at the Yerba Buena Center in San Francisco. You can join us in person or on a live webcast. And with that introduction, I would now like to turn the call over to Gary E. Dickerson. Gary E. Dickerson: Thank you, Mike. In our third fiscal quarter of 2026, Applied Materials delivered another set of record breaking results including the highest quarter on quarter revenue growth in the company's history. The rapid global build out of AI infrastructure combined with Applied's leadership position in the most enabling and highest value technologies for AI computing provide the company with an exceptionally strong foundation for multiyear revenue and profit growth. As 2026 has progressed, customers have found new ways to address clean room space constraints and significantly increase their demand for tool deliveries. 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. As AI computing drives unprecedented demand for semiconductors, there is a large gap between demand and supply for advanced chips. To ensure our supply chain and field teams can support their ramps, our largest customers are giving us longer term commitments and rolling 8-quarter forecasts. This increased demand visibility gives us high confidence that 2027 will be another strong growth year for applied materials. As customers move quickly, to bring new fab capacity online, while simultaneously optimizing yield, and output of their existing production facilities we also see strong incremental demand for our advanced service solutions. In my prepared remarks, I will share my views on how AI is resizing and reshaping the semiconductor industry and its ability to realize the value of advanced technology. I will describe the increasing value Applied is delivering to our customers by accelerating their technology road maps, optimizing existing production capacity, and helping ramp new fabs faster. And I will provide a brief update on our epic strategy as we prepare to start operations in our new EPIC Center in Silicon Valley. As I have said before, I strongly believe that AI is the biggest and most consequential technology inflection of our lifetimes. While we are still in the early innings of deployment, AI is reshaping the global economy and becoming fundamental to the relative competitiveness of companies. What I am seeing at Applied Materials is a great case study in AI's real world impact. Our investments in AI are on track to deliver compelling returns by accelerating our revenue growth and operating profit margins. In R&D and services, we are using AI to create highly differentiated products significantly speed up product development timelines, and create valuable new service solutions for customers. In operations, supply chain, and our corporate functions, AI is helping us ramp faster, drive meaningful improvements in productivity, and scale our revenue significantly faster than our headcount. Beyond Applied, we see similar trends playing out across a wide variety of industries. As the performance and cost of AI computing improves, many new applications will become technically viable and economically attractive. These expansive opportunities for value creation are fueling an intense global competition for AI leadership which can be described as 2 concurrent races. The first race is for technology leadership. AI data center returns are determined by the number of tokens generated per second and the total cost of ownership. Which is dominated by energy consumption. Improvements in token per second per watt are primarily driven by innovations in semiconductor devices and systems. This can be seen in the value of the semiconductor and semiconductor equipment industries are generating from their most advanced technologies. The second race is for capacity as demand for advanced semiconductors to support AI infrastructure scaling far exceeds supply. As a result, chipmakers are intensely focused on increasing output and yields of their existing factories while rapidly building new ones. For Applied, the technology race and the capacity race are fueling new opportunities to create and capture value. In the race for technology leadership, leading edge foundry logic DRAM, and advanced packaging have the greatest impact on AI computing performance power efficiency, and cost. Together, we expect these areas to represent approximately 80% of wafer fab equipment growth in 2026 and 2027. These 3 areas are also where Applied has strong leadership positions where we identify the key AI inflections early, and where we have shifted our investments to build an innovative pipeline of next generation solutions. In the past quarter alone, we have announced 6 new products, including our Sentura Prime epitaxy system designed specifically for high performance DRAM, producer Avila, that enables higher performance and higher layer count high bandwidth memory, Dakota VMAX, our next generation plating system, and OptiQuad CMP, for advanced packaging. And 2 new e-beam systems also for advanced packaging that expand on our e-beam leadership in the front end. Advanced packaging is 1 of the most important areas for AI compute innovation and we see very strong multiyear growth for Applied. Applied is the overall leader in this market with strong positions in high bandwidth memory and 3D chiplet stacking and we now expect our overall packaging revenues to grow >70% in calendar 2026. We are also well positioned for future packaging inflections as the industry moves to new architectures, and larger size panel formats. We have built a broad portfolio of next generation technologies for panel including digital lithography, deposition, etch, and e-beam review. In the global race to add semiconductor manufacturing capacity, our customers' ability to increase yield and output in their existing production fabs is incredibly valuable. This creates expanded opportunities for Applied to deliver new innovations in 3 key areas. Services, process diagnostics and control, and new products that increase wafer output per area of fab space. Our advanced service solutions enable customers to better optimize performance of their high volume manufacturing operations. We already have >37 thousand chambers in the field connected to our proprietary AIx software capabilities, and we use AI powered monitoring, diagnostics, and predictive analytics. Our advanced services are delivering yield improvements for customers and helping us drive higher growth rates in Applied Global Services. We now expect AGS to grow >20% in calendar 2026 and to deliver a sustainable, long term annual growth rate in the mid teens. Our metrology and inspection product portfolio is also enabling customers to accelerate fab yields and output improvements. The most advanced logic and DRAM devices require more e-beam steps that can provide sub nanometer resolution for high aspect ratio structures. Applied has unique e-beam technology and is the leader in this growing market. In parallel, we are introducing new optical inspection products which enable us to increase application share in these markets as well. As a result, we expect to grow our process diagnostics and control business >50% in calendar 2026. And we have a strong pipeline of new products that will fuel growth in 2027, and beyond. Finally, we are developing a new portfolio of output innovation products that increase the wafers that can be processed per square foot of clean room space. 1 example is our new epitaxy system for DRAM that not only increases device performance, but also uses 20% less clean room space than our earlier products. We have multiple output innovation products in qualification at customer sites that will provide significant increases in output per unit area. With incredibly strong customer pull for next generation technology and unprecedented demand for semiconductor manufacturing capacity, the value of time to market has never been greater. Our epic strategy is designed to increase innovation, and commercialization velocity by creating earlier and deeper engagements with our customers and partners and colocating key innovators. For chip makers, EPIC provides much earlier access to Applied's new product innovations, that are at the foundation of future AI compute architectures. The output from EPIC will be more mature technology that can deliver high yields faster in volume manufacturing. For applied, EPIC co innovation programs will enable us to be designed in to new chip and packaging architecture inflections increase R&D productivity and value sharing, and provide better multi node visibility to guide our investments, and resource allocation. Since our last earnings call, we announced that Broadcom will join Epic as an innovation partner to accelerate development of advanced chip packaging technologies for next generation AI systems. We also signed epic partnership agreements with SCREEN and UC Berkeley. This brings our total number of announced Epic engagements to 11, spanning system companies, leading chipmakers, top research universities, and innovation partners. The centerpiece of our epic platform is our brand new Epic Center in Silicon Valley. We will move the first R&D tool into the clean room next week and we are on track to start operations in the coming months. Before I hand over to Brice, let me briefly summarize. Demand for advanced semiconductors and semiconductor equipment continues to strengthen and as customers find new ways to address clean room space constraints we see higher demand for 2026 tool deliveries. With support from our supply chain, we have again increased our expectations for 2026 revenue. And we are confident we will grow faster than the overall market this calendar year. In the race for AI technology leadership, leading edge foundry logic, DRAM, and advanced packaging, have the greatest impact on AI computing performance, power efficiency, and cost. These are areas where Applied has strong leadership positions and an innovative pipeline of next generation solutions. Supporting strong revenue and margin growth in 2027 and beyond. And we are working closely with our customers to optimize yield, outputs, and fab ramp times with valuable new innovations in services, process diagnostics and control, and output innovation products. Brice, over to you. Brice A. Hill: Thanks, Gary. I am pleased to share that Applied delivered another quarter of double digit sequential and year over year growth in revenue, operating profit, and non GAAP earnings per share. Fiscal Q3 also marks our 13th consecutive quarter of year over year gross margin expansion, which demonstrates how we are benefiting from the tremendous value our products and services bring to our customers and the entire AI ecosystem. Our fiscal Q4 guidance demonstrates continued strong year over year momentum And in the second half of the calendar year, we expect particularly strong growth in DRAM as well as leading edge foundry logic and the advanced packaging for both. On today's call, I will update you on the demand environment, discuss how we are scaling our operations for continued growth, demonstrate how value creation is expanding our gross margins, summarize our Q3 results, and provide our Q4 guidance. Over the past quarter, the demand outlook has strengthened across all the leading indicators we track. Cloud service providers continue to increase their investments in AI infrastructure. Importantly, many of these companies are already generating positive returns on their investments. And so are their enterprise customers, including Applied. As Gary described, we are accelerating the pace of new product development increasing revenue, and generating new efficiencies in our support functions. In fact, G&A as a percentage of operating expenses has declined to the lowest level in our history. Turning to our direct customers, most leading edge logic and DRAM fabs are running at full capacity. Utilization levels are rising across the board, including in ICAPs where we see strong demand in AI related markets like power and optical chips. As a result, our customers have announced >10 new fab projects just this quarter. Customers continue to give us longer visibility than we have ever had, with some conversations now extending to 2030. These communications are valuable to our company and our own supply chain partners, who are scaling with us to support our customers' growth forecast. During the quarter, we officially opened our newest manufacturing center in Singapore and combined with other expansions worldwide, have nearly doubled our manufacturing space over the past several years. Based on the longer term demand signals from our customers, 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. In fact, we added >1.5 thousand people this quarter in worldwide manufacturing, and AGS customer support. We are also planning our next manufacturing capacity expansion ensuring we have the option to support further increases in demand by 2030. Next, I will discuss value creation and sharing. Applied is delivering value to our customers in the AI ecosystem in more ways than ever before. We have increased R&D in every year since Gary joined the company in 2012. And the investments have broadened from equipment innovations to materials engineering solutions that result in better chips. More recently, we have significantly increased R&D in advanced packaging innovations that enable better systems, supplementing our R&D with 2 small acquisitions. And today, we are increasing investments in technologies that enable better fab economics as we accelerate ramps and boost output and yields. All of these technologies will be put to work at the epicenter where we will co innovate with our customers and partners to accelerate the AI road map. In short, we have broadened our focus for making better equipment to enabling better chips and systems for AI. And better fab returns for our customers. These investments have made us a more valuable partner to our customers and enabled us to share in the value we create. 3 years ago, implemented a systematic approach to value based pricing, And today, you can see the benefits reflected in our strong revenue growth and gross margins, which have increased to >50% for the company, and >55% in semiconductor systems. We have higher pricing and margins in both new and existing products. At the same time, we remain focused on cost improvements and use them aggressively to help offset higher input costs. As we look at the many opportunities we have to further increase the value of chips, systems, fabs, we are confident we will continue to expand gross margins. Next, I will summarize our Q3 results. We generated record revenue of $9.1 billion up 15% sequentially and 25% year over year. Non GAAP gross margin increased to 50.4%, up 40 basis points sequentially and 150 basis points year over year. Non GAAP operating margin expanded to a record 34% up 190 basis points sequentially and 330 basis points year over year. And we delivered record non GAAP earnings per share of $3.50 which is up 22% sequentially and 41% year over year. Last quarter, I discussed our focus on increasing operating leverage. We grew revenue much faster than spending in Q3, on both a sequential and a year over year basis and drove OpEx as a percentage of revenue to the lowest level in nearly 4 years. Turning to the segments. Semiconductor systems delivered record revenue of $7 billion, which is up 18% sequentially and 27% year over year. The revenue mix was similar to last quarter as capacity additions in Gate All Around and FinFET drove record foundry logic revenue. DRAM revenue, which includes HBM packaging, grew by 52% year over year to record levels. As we look ahead to the second half of the calendar year, we expect a very significant increase in DRAM revenues as our customers begin to expand clean room capacity. Looking to our individual materials engineering business units, we had record revenues and deposition in Q3, including in PVD, CVD, and epitaxy, which is 1 of our fastest growing businesses this year. In materials modification, we had record sales in thermals and treatments. In materials removal, we had record revenue in both etch and CMP. We also had records in process diagnostics and control which is growing faster than our overall systems business this year. Segment non GAAP gross margin increased 190 basis points year over year to 55.4%. Non GAAP operating profit increased 45% year-over-year to a record $2.7 billion Applied Global Services delivered record revenue of $1.8 billion which is up 22% year-over-year reflecting both subscription services growth and high transactional parts demand. Ramp readiness is a major priority, and the team added >1 thousand customer support engineers. AGS is using AI and warehouse automation to grow as a efficiently as possible, which is reflected in strong gross margin of 35.6%, up 180 basis points year over year and operating margin of 30.1%, up 280 basis points year over year. From a regional perspective, China represented 26% of our semiconductor systems plus AGS revenue. We now expect our China revenue to increase this calendar year led by investments in 28-nanometer foundry logic where Applied has strong technology differentiation and share. Other revenue of $294 million is in line with our expectations. We generated record operating cash flow of over $3 billion. Capital expenditures were $707 million, resulting in free cash flow of $2.3 billion. We distributed $860 million to shareholders, including $420 million in dividends and $440 million in stock repurchases. We have $12.8 billion remaining in our share buyback authorization and continue to expect to distribute 80%-100% of free cash flow to shareholders. Now I will share our guidance for Q4. We expect company revenue of $10.25 billion, plus or minus $500 million which is up 51% year over year. We expect non GAAP EPS of $4.02, plus or minus $0.20. Is up 85% year over year. Within this outlook, we expect Semiconductor Systems revenue of around $7.9 billion up 62% year over year AGS revenue of about $1.84 billion up 22% year-over-year and other revenue of around $510 million composed primarily of display revenue. I have said previously that our display business includes new products that could help us drive higher quarterly revenue in future periods. For modeling purposes, we now expect other revenue to be approximately $400 million per quarter on average through 2027. We expect non GAAP gross margin to be approximately 50.4% in Q4 up 32 basis points year over year. And we expect non GAAP operating expenses of around $1.58 billion As a reminder, Q1 of fiscal 27 will be a 14-week quarter, which will result in a higher than average step up in our Q1 operating expenses. Finally, are modeling a non GAAP tax rate of ~11% and a tax rate of ~13% in 2027 as we absorb the effect of the global minimum tax. In summary, the rapid adoption of AI that we have been investing for is driving strong growth and record revenue and profitability for Applied Materials. We are enabling better chips, systems, and fab returns and systematically sharing in the value we create. We see continued record performance in the second half of the calendar year, with a sizable increase in DRAM and leading edge foundry logic revenue. Based on the unprecedented visibility we are receiving from our customers, we expect another strong record year in 2027 and are making substantial investments to be able to ramp to higher levels beyond next year. Now, Mike, let's begin the Q&A session. Michael Sullivan: Thanks, Brice. To help us reach as many people as we can on today's call, please ask just 1 question and no more than 1 brief follow-up question. Operator, let's please begin. Operator: Certainly. And our first question for today comes from the line of C. J. Muse from Cantor Fitzgerald. Your question, please. C. J. Muse: Yes. 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 A. Hill: Hi, CJ. it is Brice. Thanks for the question. So our key comments there and the way that we are seeing the business is that demand strengthened again during the quarter. We see new projects being added by our customers on the factory side. We see CapEx forecast going up by our customers, and we see, you know, strong CapEx from the cloud service providers all announced. So the mid you know, the >30% that we highlighted last quarter we are saying now that it is greater than that at this point, We did not wanna guide our out Q1 at this point, so that is as much information what that we are providing. But, when we look into 2027, we expect this whole demand, know, function led by AI to continue. So we are saying 2027. At this point, we expect another strong year. Yeah. Gary E. Dickerson: CJ, this is Gary. I would add just that the fastest growing parts of the market are the leading edge foundry logic, DRAM, and advanced packaging. We said that is ~80% of the growth in wafer fab equipment spending this year. And then we will see a similar profile in 2027. Those are the fastest growing parts of the market. Those are areas where we have clear leadership. And really well positioned going forward So as you said, you know, we increased greater than 20% is what we said year over year in February, then greater 30% in May. And now we think stronger than that. Going forward. And so demand and all the conversations with the customers is very strong. And, you know, what we are hearing from customers with these 8-quarter rolling forecast is very strong multiyear demand I really wanna thank our supply chain teams and operations teams. You know, they are doing a great job in responding But, again, customers are being very creative. In how they are able to expand space and take tools earlier. Our teams are reacting very quickly, and we are in a strong position to outperform this year. So strong environment, CJ, and we also highlighted that we expect to, gain share during the year. C. J. Muse: Very helpful. And I guess as a follow-up on gross margins, you talked about value based pricing, and I think we have heard from most companies around anything expedited. Service, new tools. But you talked about like for like pricing pushing higher. So could you speak maybe directly to that? And how we should be thinking about the implications to your overall gross margins as we proceed into fiscal 27 and beyond? Thanks so much. Brice A. Hill: Sure. So over the last 3 years, approximately 300 basis points increase in our company level. Gross margins, 1 driver for that was our value based pricing. That we do for every single tool. So the, the issue, CJ, was when we came through COVID, the supply chain crisis, cost of inputs went up, we found ourselves needing to reprice every tool. So we put that value based process in place. And that is what we do is examine the value of every single tool and put a new price on every single tool. We think that is required in an environment where the input costs change constantly. And then looking forward, we expect to be able to continue to improve our gross margins We are already >55% for our, you know, at the semi systems level. And, you know, value based pricing will continue to be a part of that. Gary E. Dickerson: Yeah. CJ, I would add that I think our ability to create value for customers has never been stronger. This race to bring new AI architectures to market is what every 1 of our single customers is focused on. Applied has the most enabling technologies, as I said, and the fastest growing parts of market. So we have a tremendous opportunity for creating value there. And I also talked about yield and output innovation. So all of our customers, they are racing to be first to market. With these new architectures and then also ramping as fast as possible optimizing yield and output. So puts us in a position where our products are extremely valuable. Our services are also more valuable. that is driving the greater than 20% service growth that we are seeing. We talked also about greater than 50% growth in our PDC business that also is related to yield optimization, And then our pipeline of new products is also very strong, and all of those have higher margins. And that will give us a tailwind going forward. Thank you. Operator: And our next question comes from the line of Vivek Arya from Bank of America Securities. Your question please. Vivek Arya: Thanks for taking my question. So, Gary, many of your memory customers are saying that they have 3 to 5 year long-term agreements with good visibility into units and pricing. I know you mentioned you have 8 quarters of visibility. But as you look at your customers, you know, who are signing up for, greater level of alignment with their end customers, How is that kind of translating into your longer term visibility beyond these? 8 quarters? Brice A. Hill: Yeah. I can start on that, Vivek. Hi. it is Brice. So you know, what we have from customers, of course, the large customers, we actually have visibility to the road map. So we you know, we have a perspective on probably 5 years of visibility for our largest customers. We ask them for the detail at a detailed level for the 8 quarters that we have been speaking about so we can aggregate the aggregate that and get it to our supply chain And, you know, other things that have changed, we get longer lead time POs. From our customers so that the details are agreed, you know, from a longer lead time perspective. And then we also have, you know, some charges that have moved into this environment, like cancellation charges and expedite charges. That help with that help navigate the environment. So there is been a number of changes, and I think visibility is you know, significantly increased from prior periods. Gary E. Dickerson: Yeah. Vivek, this is Gary. Certainly, everybody can see that there is a gap between supply and demand. DRAM, especially with AI, as we are expanding from training to inference to agentic AI to physical AI. Memory demand continues to go higher. And I would say especially DRAM You know, DRAM, this is gonna be a very strong growth year for Applied. More second half weighted in terms of our d DRAM growth, but very strong growth in DRAM. And I think as you know, we have expanded our DRAM share significantly over the last several years. And we continue to see strong growth in our DRAM business going into 2027, And as you said, you know, as we are in all of these conversations with customers, you know, they are talking about multiyear growth and significant demand that we are increasing our capacity to meet. And then for us, relative to our position in DRAM, we are the number 1 process equipment provider in DRAM. We are the leader in the CMOS periphery logic to upgrade transistors for higher performance and power. Including, I talked earlier on the call about very strong epitaxy growth. HBM packaging, we are the leader. Materials deposition for wiring and patterning. Conductor etch, e-beam technologies, and we are in deep partnerships with customers also for future DRAM architectures innovations in 6F², 4F², and we are very well positioned for 3D DRAM in the future. So I have high confidence that we are gonna continue to drive significant growth and gain share in this segment. Vivek Arya: Got it. For my follow-up, 1 more on gross margins. You know, if I go back from calendar 2021 to 2025, your gross margins and those of your, you know, US peer were about the same. In fact, you know, Applied was slightly ahead. But in the near term, you know, they are about 150 basis points higher. So I understand mix for every company is different. But I am curious, how come the gross margins were so aligned in those prior 5 years yet they are kind of lagging a little bit? So just what is the prospect, Brice, for expanding gross margins to more of this industry level going forward? Thank you. Brice A. Hill: Yeah, Vivek. I do not know if I have a great reason to you know, think about comparisons. But from our perspective, we have made tremendous progress from a gross margin advancement We talked about our value pricing, and, really, it is the portfolio. The portfolio continues to strengthen, as we target the R&D and the collaborations with our customers yet the most valuable you know, inflection solutions that need to be developed. And so the pricing really is just demonstrating the value of that portfolio. And, yes, we expect to be able to continue that Of course, we have some other elements in our portfolio like the display business, that we have talked about. When that grows faster, you know, that is that has a different effect on the corporate gross margin. So the portfolios are different between the 2 companies. But we expect to be able to continue to, improve our gross margin and grow the value over time. Gary E. Dickerson: Yeah. Again, I would also add, we have been driving margin growth pretty significant margin growth. We talked about 13 quarters of year over year growth. You know, a 190 basis points in our semi business in the last year, And I have high confidence we are gonna continue to drive margins higher continuing the growth that we have seen over the last few years. Thank you. Operator: Thank you. And our next question comes from the line of Stacy Rasgon from Bernstein Research. Stacy Rasgon: Hi, guys. Thanks for taking my questions. I have 1 more on gross margins as well. And look, I feel a little bad harping on it because I they are actually really good. You they are they are well >50%, and they are coming in higher. Than you would expected. But I am just wondering you are guiding them flat at these current levels, at least in the near term. On a pretty sizable revenue increase. And just given all the commentary around portfolio and pricing and everything, was just a little surprised. Why is it? Is that is that just a function of the display business growing sequentially, so just mix between the businesses? Is there something else going on in the near term? Brice A. Hill: Hi, Stacy. Brice. Yeah. Thanks for pointing out the growth in display. it is certainly a factor in the recipe. But, really, it is just, ramp headwinds as with the growth we are ramping a lot of customer service engineers, We have a lot of resources that we are adding in the semi business. And so, yes, we get the benefit of strong segment mix with semi growing so strongly. And we get the benefit of more volume, but we do have some ramp costs that are in the forecast. So we feel good about in our guided quarter, we feel good about, having a flattish margin at the company level. And then like we said, as you look longer term, we will expect to be able to continue to grow the margin. Stacy Rasgon: Got it. So I guess to follow-up on that then, if there is ramp cost now, I guess, how long do those last? Are you still ramping up more engineers and other costs, like, into subsequent quarters, or are you all in this quarter? And then as we think about that, the pace of that expansion, like, what does it look like? I think you have talked about last quarter thinking about something like, you know, 10 bps or something sequentially kinda going forward. Is that still the trajectory? Or given some of the other drivers, do you think it can come in better than that? Brice A. Hill: No. I think the continued pace of improvement, we called that slow in the past. I think slow improvement is the right way to think about it. We do expect to improve it. You know, over the longer horizon. So I think, we will continue to add employees over the next few quarters, but that headwind will recede as the, revenues continue to grow. Stacy Rasgon: Thank you. Operator: And our next question comes from the line of Timothy Arcuri from UBS. Your question please. Timothy Arcuri: Thanks. Brice, I wanna go back to this systems guidance for the year. So you said up more than 30 last call. Things have gotten better since then. Even if you go 40%, that implies a pretty big decel into December. So you would go from 18% in July to 12% in October to then 6% in January, and that gets you to, like, 40%. And Lamb is talking about, you know, WFE being up, like, 38%. So outgrow, you have to be at least 40 if you believe their numbers. So would you commit to growing systems 40% or more? Brice A. Hill: Hi, Timothy. Thanks for the question. We are committing that we expect to outgrow. We think that is already happened so far this year, and we expect to have that happen wherever we land from a growth perspective as we get through the year. And I think you have got the dynamics right. We first guided greater than 20%. We raised that. After customers added clean room projects, we raised it to >30% and we are saying it is even higher now And so, yeah. We will expect know, we are not giving that number because we are not guiding that out quarter. But, those are the right dynamics. I guess the last thing I will add is I guess the last thing I will add there is we do expect sequential growth in our Q1, the calendar Q4, but not guiding that at this point. Timothy Arcuri: Okay, Brice. And then maybe ask a different way. So the comment about manufacturing capacity, doubling. So should I just take that kind of at face value and so you are shipping roughly-- you know, revenueing roughly $7 billion in the July quarter. So at face value, does that mean that sometime during calendar 28, you would be revenue of $14 billion or is it more nuanced than that? Thanks. Brice A. Hill: It is more nuanced. I think you should take it explicitly. it is capacity. So it is not a revenue forecast for 2028. What we have to do with long lead investments like clean room is make sure we have the clean room in place with a profitable business or any demand forecast or any demand reality in that environment, And so we are just communicating because partially we are communicating to our suppliers also We are putting the capacity in place. To be able to support a wide range of output requirements in 2028 And as far as that goes, the years after also. So no, it is not a revenue forecast. But, yes, it is giving you an indication of what we will be prepared for. Timothy Arcuri: Okay. Thanks. Operator: Thank you and our next question. James from the line of Krish Sankar from TD Cowen. Your question please. Krish Sankar: Yes. Thanks for taking my question. I just wanted to follow-up on Timothy's Gary or Brice, it seems like your customer conversation seems to have shifted from annual price discussion to basically delivering and meeting requirements, basically time to market, it is a 2 year visibility. I am just wondering, does this give you some freedom on pricing or does it add more burden on expenses on setting up your capacity on the and the supply chain for the upcoming ramp And if you have a visibility of 2 years, why not give a January quarter qualitative outlook? And then And then I have a follow-up. Brice A. Hill: Yeah. The customer is definitely-- you know, with especially the large customers, we got very strong visibility. And you are right. They are becoming, more and more interested in, scheduled delivery and hitting the schedules, which is why they are collaborating, cooperating on specificity of the orders and the 8 quarter visibility that we are also sharing with our suppliers. So I think that dynamic, it has improved, you know, the situation for us and the planning environment dramatically from the prior year. So, you know, I think I think all those things are true. I guess that is our, our perspective at this point. Krish Sankar: Gotcha. Gotcha. And then maybe, Brice, I think in your prepared comments, you kind of spoke about certain customers giving you visibility into 2013. I am just curious, are those conversations about technology? Or is that still about capacity to scale up and meet that demand? Brice A. Hill: Well, yeah, it is definitely about technology. So especially with the large customers or mature customers, you know, we know the fab projects that are on the road map. We know the technology that is planned. And, you know, even if it is a new technology, we have a perspective of our position in those technology. So we do have the ability to plan in a detailed manner for 5 years. And then what happens at the 8 quarters out is we get very specific about the node and that tool types that need to be built so that we can pass that information along to the suppliers. And we do have-- Yeah. Gary E. Dickerson: Yeah. Krish, you know, we are I am in many of those conversations with the CEOs of our largest customers. And for sure, you know, they are giving us visibly deep, detailed visibility for the 8 quarters But even beyond that, I think they have communicated they see strong multiyear demand in their business. And so they are wanting us to be ready to support that demand. And as you know, it takes time for us to get the supply chain ready. To support those levels. So yeah, we are getting the visibility relative to capacity needs you know, beyond the 8 quarters. On the technology, I would say that those discussions go out maybe 10 years in the future. Because applied is the most enabling for those key architecture inflections. We have the most broad, the most connected, the most unique portfolio to enable the new transistors, the wiring, the DRAM architectures, new packaging architectures, and it takes time to bring those innovations to market. So Applied is unique in the portfolio we have the most enabling technologies. If you looked at the top 5 or 10 technologies you need to enable these new architectures, Applied has, by far, the majority of those technologies And so very deep co innovation relationships with customers where we are cocreating those So that technology visibility goes beyond 5 years in these deep co innovation relationships with the customers. Krish Sankar: Gotcha. Thanks a lot, Gary. Thanks a lot, Brice. Appreciate it. Operator: Thank you. And our next question comes from the line of Harlan Sur from JPMorgan. Your question please. Harlan Sur: The team previously guided your global ICAPs business to be flat to slightly up this year. Outside of China, I mean, we are seeing a strong cyclical recovery in automotive, industrial for your analog power microcontroller customers. Right? They are also articulating an environment of tight supply as well. Utilizations are rising meaningfully. Brice you articulated, but are these global customers also starting to pick up their spending, and do you see your total ICAPs business growing this year? Brice A. Hill: Harlan, thanks for the question. So I will start here. Yeah. In pointing this out, we do see a change in the ICAPs dynamic. So you called out the increasing utilization across those customers. that is a positive. Our view of China is that it will grow this year, and will grow next year. that is a big part of our ICAPS portfolio. And we do think that ICAPS overall will grow this year and will grow next year. So the digestion-- you know, we are hopeful that the digestion that we have talked about on the equipment side in the past, is expiring, and we can return, to growth. And then specifically, for our nonChina customers, as we look into next year, we think there will be, positive growth for those customers. We see bright spots in power and photonics and other areas. So it is looking much more positive than it has the last couple of years. Harlan Sur: I appreciate the color there. And another quarter of strong revenue growth and growth in operating margin profitability in AGS, right? 30% operating margins. I think that is the highest level, I think, in 2 years. Plus your incremental gross margins, I think, for the last couple of quarters have been well above 40%. So strong. And you also have been delivering strong incremental operating margins as well. I know the team has historically thought that they could drive AGS operating margins. Longer term into the low 30% range, but on your strong incremental margin profile, could we see gross margins approaching the 40% range and operating margins in the mid thirties as AGS revenues continue to scale higher? Advanced services becomes a bigger part of the mix kind of over the long term? Brice A. Hill: Yeah. Thanks, Harlan. So I think not different from the semi business. We do expect that we have the opportunity to improve gross margins over time in the services business. And what is happening there is that solutions like the information solutions that come from AI are allowing us to develop new products and be more efficient in the services that we are providing That combined with the growing installed base gives us good growth there. And then this year, we had the benefit of significant increase in utilization, which grows the spares business more quickly than in prior years. So that helps us from a gross margin perspective. That from that, you know, that point, you can only grow to a 100% utilization once. So that sort of, slows down, but we do expect we will be able to improve gross margins over time in the services business. Gary E. Dickerson: Harlan, I would add that would add that, you know, for customers right now, optimizing output and yield is incredibly important in a supply constrained environment, and that is gonna go on for some period of time So the value of services that optimize yield is incredibly valuable. And the good news is we have a lot of new innovation there. We talked about over 37 thousand chambers connected to our AX servers. We have AI enabled applications. For preventative maintenance or chamber matching. Those are incredibly valuable services that will drive our top line growth, our service contract growth faster, and also enable us to capture value more quickly. So, actually, I am more positive on growth in the AGS business both top line and bottom line, than I have ever been. Oh, thanks, Gary. Harlan Sur: Thanks, Brice. Operator: Thank you. And our next question comes from the line of Blayne Curtis from Jefferies. Your question please. Blayne Curtis: Hey, good afternoon guys. Thanks for letting me ask a question. I want to ask on NAND, it doubled in the quarter, obviously, off a small base. Just curious what you are seeing in that market. And then you did mention it in October. I am assuming maybe that is a small dollar. that is why you did not call it out, but is it continuing to grow? Brice A. Hill: Hi, Blayne. Good growth. In NAND this year from a percentage perspective. Small base, like you say, but we think this year is a strong year of growth for NAND. As we look forward, you know, into our next year, we think the dynamic is that really, that AI dynamic that we have called out before and Gary mentioned earlier, leading edge logic and DRAM and advanced packaging will be the fast growers. ICAP should return to growth for us. NAND should grow, but will be the you know, a slower grower, in the out year. Blayne Curtis: Thanks. And then, Brice, maybe on CapEx. You talked about the expansion of spending for 2030. I do not know if we are going to hit it now. I am just kind of curious if you can comment on what you expect OpEx to be in October, and then just any perspective next year. I think Epic rolls off, so I think the prior was that it would go down. But now with strength of the business, I am just curious how you are thinking about that spend. Brice A. Hill: Yeah. that is a that is a great question because you are right. On the strength of the business, of course, we have more additions that we want to do. This is a CapEx comment. We want to we will be putting equipment inside Epic as well as other investments So what I would say about CapEx, it will still be a CapEx year that is higher than normal, it will decline as a percentage of revenue as we go into 2027. So, that is that is our perspective at this point. Blayne Curtis: Thank you. Operator: Thank you. And our next question comes from the line of Jim Schneider from Goldman Sachs. Your question please. Jim Schneider: Good evening. Thanks for taking my question. I was wondering if you could maybe comment given the strength that you are seeing across your focus areas as you look into fiscal 27 or calendar 2027, would you care to rank where you see the incremental strength between foundry logic DRAM spending, and advanced packaging? Brice A. Hill: Yeah. Jim, this is Brice. I will start. We actually do not distinguish between them. We think the system level pull, you know, that, AI provides is similar across those different end markets. So I would not call the difference enough to distinguish between them. So it will be strong for Leading Logic. It will be strong for DRAM. It will be strong for advanced packaging. And, you know, what is new for us now is that we also think that ICAPs will grow next year. So that is, another difference from our previous 90 days. Gary E. Dickerson: Yeah. Jim, thanks for the question. Yeah. I think we talked earlier about 80% of WFE growth in those 3 segments in 2020 and we see a similar profile, maybe even a better profile, but, right now, we would say similar profile in 2027. Those 3 segments, as Brice talked about, we see those as the fastest growing segments. In 2026 and 2027 and, frankly, over the next several years. Jim Schneider: that is helpful. Thank you. And then just given the first half versus second half dynamic we are seeing in calendar 2026, Is there any reason why in calendar 2027, you would not see an accelerating growth rate for overall revenue. Is there anything you see on the horizon that would give you pause? Thank you. Brice A. Hill: I think, a lot of people ask, Jim, about what is governing growth. I think as you move into the longer term, what governs growth is clean room from our perspective. So customers continue to add clean room projects. that is why we raised our forecast, this year. Some of those will add incremental, clean room space next year, and, of course, it gets larger as the out years come into focus because the those projects usually take a number of years. But, anyway, I think it will be the availability of clean room at a high level that will determine what we can all ship next year. Jim Schneider: Thank you. Operator: And our next question comes from the line of Mehdi Hosseini from Susquehanna International. Your question please. Mehdi Hosseini: Yes, sir. Thanks for taking my question. All the good ones have been asked. I just have a couple of follow ups. Maybe for Gary. Forget about the near term trend, but I wanted to better understand how you are thinking about your targeted revenue growth and operating margin for a scenario where WFE will be $150 billion to $175 billion? Any color would be great. Gary E. Dickerson: Oh, hi, Mehdi. Thanks for the question. I think, you know, when we have the October investor event, we will give more color relative to growth rates. What I what I would say is that if I look at the setup, relative to compute demand going forward, you know, we see this as a strong multiyear growth driver. And the fastest growing segments in the market what we talked about earlier, the most valuable parts of the market, leading edge foundry logic, DRAM, advanced packaging, We are number 1, and we are positioned to gain share going forward in those segments. So, like, top line growth we have a number of really great drivers that will enable us to outperform in 2026, and, you know, we look at very strong growth going forward. I also believe that, really, across the board, the value that we are delivering is also increasing. We are we do have the most unique connected portfolio that is creating tremendous value for our customers. For new chip and packaging architectures, That puts us in a good position to continue to drive our margins higher going forward. And I mentioned earlier about the innovations and yield and output And as you can imagine, Mehdi, every single customer they are focused on getting as many chips out per square meter as they possibly can. So that increases the value of our service business, and we are bringing innovation that really directly address those areas of focus for our customers. So like, relative to the top line growth, bottom line growth, you know, I am very optimistic. But we will give more color, Mehdi, when we have our October investor meeting. Brice A. Hill: Yeah. I just wanna add I will just do 1 add, Mehdi, you are really describing this year and scenarios that people are talking about, for this year. So I think we are giving you the ingredients for that with greater than 20% services business, for the calendar year, something higher than 30% for the semi business, We talked about our gross margin outlook. We gave you the display, item. And then whatever that WFE number is, we have said we expect to gain share. So I think you have the ingredients, you know, needed to have a perspective on that. Mehdi Hosseini: Got it. Thank you. Just a quick follow-up. I think your NAND has been relatively the smallest part of your semi, and I think it is a reflection of more of a upgrade going on within a NAND than wafer capacity add. When do you think the industry would actually start adding some of the capacity to offset some of these losses due to, increased migration to a 300-plus layer count. Brice A. Hill: Hi, Mehdi. Yeah. So for the-- you know, the dynamic here, I think we have described in the past is wafer starts continued to decline in NAND. So the projects you see are for upgrades, you described, to get more layers. That we expect the environment to continue the same dynamic for the next few years. The 1 place that will be different is new projects in China, I believe. But for, you know, for the larger customers, it is mostly increased space to afford those upgrades in layers that you described Mehdi Hosseini: Got it. Thank you. Yeah. Thanks, Mehdi. Operator: And, operator, we have time for 1 more question, please. Certainly. Then our final question for today comes from the line of Srini Pajjuri from Royal Bank of Canada. Your question please. Srini Pajjuri: Thank you. Thank you. Thanks for squeezing me in. Gary, a couple of questions on the technology front. You talked about panel level packaging. I am just curious as to when do you see panel level packaging becoming mainstream And, you know, compared to your current position in advanced packaging, what sort of opportunities do you see in that market? And then also, if you can touch on hybrid bonding. It seems like that is finally happening. And, you know, what sort of opportunities you are seeing in that area? Gary E. Dickerson: Thanks for the question. So as I talked about earlier on the call, packaging is 1 of the most important areas in the industry relative to improving AI compute performance and power. Multichip connectivity, how you move the data, huge focus for all of our existing customers and new customers that are innovating with new architectures. So over 70% growth this year. We have by far and away, the strongest portfolio of technologies. We have also talked about some acquisitions that we have done here recently that add to our strength in packaging. So I have very high confidence that we will continue to drive significant growth over many years in packaging. Relative to new substrates, you know, all of our customers are really focused on connecting as many logic and memory chips together at the highest performance and power as they can And so we are in deep co innovation relationships with companies, and there is a race for all of these companies to drive these new architectures to market because there is so much value in performance and power So, you know, I look at that as a great opportunity when we model our share of those new architectures We have a great opportunity to grow our share We have new capabilities that will expand our available market as those new architectures are adopted I do not wanna give a specific forecast relative to timing, but what I would say is that, you know, we will see a pretty significant growth in next year in our panel revenue. And, certainly, it is going to ramp a fair amount after that going forward. But our positions there are stronger And then relative to hybrid bonding, hybrid bonding is a way that every customer, whether it is leading edge foundry logic or DRAM or high bandwidth memory, They are all wanting to shorten the wiring length to improve the performance and power So it is a very important inflection for all of our customers Again, Applied has strong technology in hybrid bonding. We have also very big business in the adjacent steps around the hybrid bonding. We have the only integrated R&D facility working with our customers to enable those new architectures for packaging So this will be a meaningful growth driver over time in addition to all the other technologies that we have in advanced packaging. So I am very optimistic. Over 70% growth this year. And very strong growth in 2027 and going forward. Thanks, Gary. Srini Pajjuri: Then 1 quick follow-up for Brice. Brice, I understand you do not wanna give us FQ1 guidance, but you did call out that it is a 14-week quarter. Just wondering what sort of impact, if any, that will have on your revenue sequentially? Thank you. Brice A. Hill: Sure. What we have seen in prior years when we had a 14th week in the quarter, was, you get close to a ratable performance on the services side of the business. And, not so much on the equipment side. Most of the planning is done at quarterly basis on the equipment side. So yeah. And then from a spending perspective, as you might imagine, everybody wants to be paid. And so most of the spending will, occur in the quarter. Srini Pajjuri: Thanks, Srini. Thanks, Brice. Michael Sullivan: Great. So thank you, Srini, for your questions. And, Brice, would you like to give a little summary before we close the call? Brice A. Hill: Thanks, Mike. We are excited that Applied's unique portfolio and strategy are enabling us to grow faster than the market and increase margins. We look forward to an even stronger second half and to seeing many of you at our upcoming events. I will be attending the Citi Conference in New York, and Gary will be at the Goldman Conference in San Francisco. The whole team looks forward to seeing you at the Epic Center in October. And giving you our longer term outlook at our investor breakfast at Semicon West. Operator: Mike, please go ahead and close the call. Michael Sullivan: Alright. Well, thank you, Brice, and we would thank everybody for joining us today. A replay of today's call is gonna be available on the IR page of our website by 05:00 Pacific Time. And we would really like to thank you for your continued interest in Applied Materials. Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day. Good day. Before you buy stock in Applied Materials, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Applied Materials wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $432,621!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,314!* That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 20, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Applied Materials. The Motley Fool has a disclosure policy. Applied Materials (AMAT) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide. Applied Materials (AMAT) is back in focus after reporting third quarter fiscal 2026 results, with sales of US$9,115 million and net income of US$2,538 million, along with fresh fourth quarter revenue guidance. See our latest analysis for Applied Materials. Applied Materials' latest results arrive after a sharp pullback in the share price, which declined 3.53% on the day and 9.48% over the past week. However, the 90 day share price return of 16.10% and year to date share price return of 84.54% show momentum from earlier in the year, while the 1 year total shareholder return of 210.85% highlights how returns including dividends and buybacks have compounded over time. If you are watching how AI driven chip demand is moving equipment suppliers like Applied Materials, it can be useful to see what else is gaining attention through the 55 AI infrastructure stocks The stock has given back some ground after a strong run, which puts Applied Materials in an interesting spot. Investors may want to consider whether this pullback offers an attractive entry point or if it makes more sense to wait and evaluate the valuation further. The most followed narrative currently places Applied Materials' fair value at $627.66, compared with the last close of $496.17, which frames the recent pullback in a different light. Read the complete narrative. Want to see what sits behind that fair value for Applied Materials? The narrative leans on faster revenue expansion, firm margins, and a richer future earnings multiple. It examines how those ingredients combine into one long term earnings path and discount rate story. Result: Fair Value of $627.66 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, you still need to factor in Applied Materials' heavy exposure to a handful of key customers, as well as ongoing geopolitical risks around export controls to China. Find out about the key risks to this Applied Materials narrative. While the narrative fair value for Applied Materials suggests upside, the SWS DCF model points in a different direction. On this view, the stock at $496.17 trades above an estimated future cash flow value of $265.88, which implies the shares screen as overvalued on cash generation. Investors weighing these two frameworks may want to consider how much certainty they place on long range growth and margin forecasts versus a more conservative cash flow view. Our DCF model helps you see exactly how those assumptions feed into the value gap and the risk that expectations prove too optimistic or too cautious over time. Look into how the SWS DCF model arrives at its fair value. Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Applied Materials for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 52 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity. After weighing both the upside narrative and the richer DCF valuation for Applied Materials, it makes sense to move fast and review the underlying data yourself. To see how the balance of concerns and potential rewards stacks up, start with the 4 key rewards and 2 important warning signs. If you stop with Applied Materials, you risk missing other opportunities that fit your style. Use the Simply Wall St Screener to widen your watchlist intelligently. Target dependable cash generators by reviewing companies in the solid balance sheet and fundamentals stocks screener (50 results) that aim to pair financial strength with steady operating performance. Seek potential value opportunities early by scanning the 52 high quality undervalued stocks where quality businesses may trade at prices below their assessed worth. Hunt for lesser known opportunities before others notice them by checking the screener containing 20 high quality undiscovered gems that combine strong fundamentals with lower market attention. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include AMAT. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Applied Materials, Inc. (NASDAQ:AMAT) just reported a record quarter and guided its next one well above Wall Street projections. Even so, the stock went down. The company published fiscal third-quarter results after the market closed on August 13, with revenue of $9.12 billion, up 25% year-over-year and higher than analyst expectations of $8.99 billion. Non-GAAP earnings per share reached a record $3.50, up 41% from the previous year and above the $3.40 consensus projection, marking the company's fifth straight quarter of exceeding EPS expectations. Meanwhile, GAAP gross margin came in at 50.3%, while operating income reached a record $3.08 billion. The forward outlook was, if anything, stronger than the quarterly results. Applied Materials, Inc. (NASDAQ:AMAT) forecast fourth-quarter revenue of around $10.25 billion, well above the $9.5 billion analysts projected, and non-GAAP EPS of around $4.02, compared to a Street expectation of $3.69. CEO Gary Dickerson cited strong AI-driven demand for materials engineering equipment, and management stated that it now expects another high growth year in 2027, citing increased client demand visibility. Despite clearing every headline bar, shares dropped more than 3% in after-hours trade. The most likely explanation is context: Applied Materials shares had already rallied around 193% to 200% over the past year heading into this report, at a forward P/E near 26.78x, leaving it "priced for perfection" where even a strong beat and raise failed to meet extremely high investor expectations for AI-driven growth. That said, the exposure to China was the clearest clearest legitimate concern. Revenue from China fell to 28% of overall revenue, down from 35% a year ago, with China sales down marginally in dollar terms to around $2.51 billion from $2.55 billion. That drop reflects the ongoing impact of US export restrictions, which are expected to reduce Applied Materials' revenue by hundreds of millions of dollars this fiscal year. Despite near-term obstacles, smart money positioning prior to the report revealed rising institutional support. Institutional hedge fund holdings increased from 111 in the fourth quarter to 138 in the first quarter, indicating accumulation among prominent asset managers. Short interest is still tightly contained at 1.80% of total float, showing little speculative short pressure across the stock. None of the aforementioned factors change the core development story. Key growth investors should view any retreat as a buying opportunity, not a red flag. Applied Materials, Inc. (NASDAQ:AMAT)'s position in cutting-edge logic, DRAM, and sophisticated packaging ensures multi-year revenue visibility as global AI infrastructure development accelerates into calendar 2027. Management's own commentary points to continued strength heading into the year 2027, with equipment growth now expected to exceed 30% for the year. While we acknowledge the potential of AMAT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years Disclosure: None. Follow Insider Monkey on Google News.

Applied Materials’ second quarter saw revenue and non-GAAP profitability exceed Wall Street expectations, but the market responded negatively despite the company’s strong headline growth. Management attributed the outperformance to robust demand for semiconductor manufacturing equipment, especially in leading-edge logic and DRAM for artificial intelligence (AI) infrastructure. CEO Gary Dickerson highlighted, “Customers have found new ways to address clean room space constraints and significantly increase their demand for tool deliveries.” The quarter also benefited from expanded services and strong execution in advanced packaging technologies. Is now the time to buy AMAT? Find out in our full research report (it’s free). Revenue: $9.12 billion vs analyst estimates of $9.04 billion (24.8% year-on-year growth, 0.9% beat) Adjusted EPS: $3.50 vs analyst estimates of $3.39 (3.1% beat) Adjusted Operating Income: $3.10 billion vs analyst estimates of $3.03 billion (34% margin, 2.3% beat) Revenue Guidance for Q3 CY2026 is $10.25 billion at the midpoint, above analyst estimates of $9.66 billion Adjusted EPS guidance for Q3 CY2026 is $4.02 at the midpoint, above analyst estimates of $3.69 Operating Margin: 33.7%, up from 30.6% in the same quarter last year Inventory Days Outstanding: 132, down from 146 in the previous quarter Market Capitalization: $393.9 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. C. J. Muse (Cantor Fitzgerald) asked about the updated growth outlook for semiconductor systems. CFO Brice Hill said demand has strengthened beyond prior 30% growth expectations, with ongoing customer CapEx increases and strong multi-year demand signals. Stacy Rasgon (Bernstein Research) questioned why gross margins are guided flat despite higher revenue. Hill explained near-term ramp costs for new hires and service engineers, as well as business mix changes, are offsetting margin gains, but expects improvement over time. Vivek Arya (Bank of America Securities) asked how long-term customer agreements translate into Applied’s visibility. Hill said the company now gets detailed eight-quarter forecasts and multi-year technology roadmaps, enabling improved planning and supply chain alignment. Krish Sankar (TD Cowen) inquired if increased scheduling visibility allows for more pricing flexibility or adds cost pressures. Hill noted that stronger customer collaboration improves planning and reduces uncertainty, but also requires investment in capacity and supply chain readiness. Harlan Sur (JPMorgan) asked about growth and margin potential in the services segment. Hill said AI-enabled solutions and a growing installed base are driving higher margins and sees continued improvement as service innovation expands. Going forward, the StockStory team will track (1) the pace of adoption for new advanced packaging and DRAM solutions, (2) execution on manufacturing and supply chain expansion to meet demand, and (3) sustained growth in the services segment as AI-driven monitoring and analytics scale. Progress in panel-level packaging and further customer commitments will also be key indicators for Applied’s ability to capitalize on AI-driven semiconductor demand. Applied Materials currently trades at $500.50, down from $534.54 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members). ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively. Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.

Since the AI trade has gained momentum and has shaken the investor community with perhaps one of the fastest bouts of enormous wealth creation, it must be accepted that some corners of the market are behaving like spoiled brats. Why do I say so? First, merely beating Street estimates is not enough. A company has to obliterate it. Second, guidance should be above expectations as well. However, semiconductor equipment maker Applied Materials (AMAT) fulfilled those loft expectations, too. Yet, its shares ended 5.12% lower in Friday's trading session following its Q3 2026 results. This time, the expectations were deemed to be high, and the result was a nosedive in AMAT stock. CoreWeave vs Nebius: Both Companies Reported Strong Earnings, But Here’s the Stock You Should Buy A $210 Billion Reason to Buy AMD Stock Here As Oracle Deepens Its Partnership with AWS, Here’s How You Should Play ORCL Stock Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else. Founded in 1967, Applied Materials is one of the most important companies in the semiconductor equipment ecosystem. It describes itself as a leader in materials engineering solutions used to manufacture virtually every semiconductor and advanced display. Its equipment helps chipmakers perform processes such as deposition, etch, ion implantation, rapid thermal processing, and metrology, among others. Valued at a market cap of $402.7 billion, AMAT stock has almost doubled this year, with a year-to-date (YTD) rise of 109.2%. The stock also offers a dividend yield of 0.40%, and with a payout ratio of 18.51%, the company can easily continue on its dividend-growing spree of the last eight years. So, was the drop in the stock really warranted after the Q3 print? Certainly not, and here's why. Before diving into Applied's Q3 results, it must be acknowledged what the company has achieved over the past 10 years. The period has seen the company growing its revenue and earnings at CAGRs of 12.04% and 20.41%, respectively, with the company's market cap surging by 12.5 times. And Q3 2026 established that the momentum has gone nowhere. In fact, it has been reinforced. The quarter saw the company reporting record revenues of $9.12 billion, up 25% from the previous year. The core semiconductor systems business witnessed a 26.5% year-over-year (YOY) rise to $7 billion as demand remained strong across foundry, DRAM, and flash memory. Also, gross margins crossed 50% to come in at 50.3% for the quarter compared to 48.8% in the year-ago period. Earnings increased by even more at 41% to $3.50 per share, surpassing the consensus estimate of $3.40 per share. Notably, this was the ninth consecutive quarter of earnings beat from the company, and the company's guidance for an EPS of $4.02 per share for Q4 is above the estimates of $4 per share. Revenue expectations for the same period are at $10.3 billion, higher than the consensus estimate of $9.84 billion. Cash from operating activities increased as well to $3.04 billion from $2.63 billion in the prior year. Free cash flow, consequently, rose to $2.33 billion from $2.05 billion earlier. Overall, Applied closed the quarter with a cash balance of $7 billion, much higher than its short-term debt levels of $1.3 billion. Yet, valuations for AMAT stock remain elevated. Its forward price-to-earnings, price-to-sales, and price-to-cash flow of 39.66, 11.79, and 46.19 are all much above the sector medians of 24.51, 3.50, and 20.66, respectively. However, the growth opportunity should not be dismissed, and Applied's place in it. The global semiconductor equipment market is set to reach $229 billion by 2028, and Applied, by virtue of its position as the foremost process equipment provider in leading-edge foundry logic, is going to be one of the biggest beneficiaries. Encouragingly, the company is the number one process equipment provider in DRAM, too. Applied Global Services, or AGS, can be another growth driver for the company. Q3 2026 saw this segment's revenues rise to $1.78 billion from $1.46 billion in Q3 2025. Software and services support is becoming an essential aspect for companies like Applied, involved in semiconductor equipment. Notably, the value of AGS is particularly clear in the current capacity environment. Applied said in August 2026 that most advanced logic and DRAM factories were running at full capacity, while customers had announced more than ten new fab projects during the quarter. This has led to Applied now having more than 37,000 chambers connected to its AIx software, up from more than 35,000 in May 2026. These connections support AI-powered monitoring, diagnostics, and predictive analytics. The growing data set should also improve the quality of the service over time, since Applied can compare equipment behavior across thousands of production environments. AGS additionally helps customers prepare for capacity ramps. Applied added more than 1,000 customer support engineers during its fiscal third quarter, showing that demand is not merely theoretical. Finally, advanced packaging represents another important area of focus. Through the acquisition of NEXX, Applied is extending its capabilities into panel-level packaging. NEXX contributes specialized large area deposition equipment designed for advanced packaging applications. This technology enables panel-level packaging to accommodate larger chiplet-based designs that combine graphics processing units, high bandwidth memory, and input output components within a single package. Thus, analysts have attributed to AMAT stock an overall rating of “Strong Buy” with a mean target price of $637.15. This denotes a potential upside of 18.6% from current levels. Out of 38 analysts covering the stock, 27 have a “Strong Buy” rating, three have a “Moderate Buy” rating, and eight have a “Hold” rating. On the date of publication, Pathikrit Bose did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com

Morgan Stanley said the market was expecting Applied Materials to provide greater confidence following peer earnings that indicated systems shipment growth of more than 40%. The firm lowered its price target for Applied Materials’ shares to $642 from $646, while keeping an ‘Equal Weight’ rating on the stock. Analysts at BofA said investors may have been looking for more leverage in gross margins and quarter-over-quarter growth guidance closer to Lam Research. Applied Materials Inc. (NASDAQ) shares fell about 6% in Friday’s pre-market session as Wall Street offered mixed reactions to the chip-equipment maker’s third-quarter results and outlook for the fourth quarter. While several analysts praised the results and long-term outlook, others said expectations had been higher, citing gross-margin commentary, near-term guidance, and the pace of systems growth. See what 10M+ investors are talking about. Get the Stocktwits Daily Rip for what retail is watching right now, free to your inbox AMAT was among the top trending tickers on Stocktwits at the time of writing. According to TheFly, Morgan Stanley described Applied Materials’ Q3 earnings as “good, but not great,” noting that the market was expecting greater confidence following peer earnings that indicated systems shipment growth of more than 40%. “By no means is 42% systems shipment growth ‘bad,’” Morgan Stanley said, but added that investors had expected Applied Materials to provide greater confidence. Morgan Stanley lowered its price target for Applied Materials’ shares to $642 from $646, while keeping an ‘Equal Weight’ rating on the stock. Analysts at BofA also called Applied Materials’ third quarter (Q3) report a “solid beat/raise,” but said investors may have been looking for more leverage in gross margins and quarter-over-quarter growth guidance closer to Lam Research Corp. (LRCX). The firm lowered its price target for AMAT to $650 from $720 while keeping a ‘Buy’ rating. UBS lowered its price target to $675 from $705 while keeping a ‘Buy’ rating. The firm cited softer-than-expected gross-margin commentary and conservative near-term guidance for its price target cut. Deutsche Bank cut its target to $605 from $680, saying the company’s outlook remains “hazy,” while maintaining its ‘Buy’ rating. Despite the concerns, several analysts remained positive on Applied Materials’ longer-term outlook. JPMorgan raised its price target to $660 from $515 and maintained an ‘Overweight’ rating, saying the company’s bull thesis remains intact, supported by accelerating AI-driven wafer-fab equipment demand and improving visibility. Bernstein also raised its target to $700 from $675 while keeping an ‘Outperform’ rating, saying the results were good and that fourth-quarter guidance was “very strong,” with strength in leading-edge foundry/logic, advanced packaging and DRAM. While UBS trimmed its price target, the firm maintained that Applied Materials' capacity expansion and strong systems growth support meaningful long-term upside. Applied Materials CEO Gary Dickerson said during a post-earnings call that customers are finding ways to address clean-room constraints and are increasing demand for tool deliveries. The company has also received longer-term commitments and rolling eight-quarter forecasts from its largest customers. “This increased demand visibility gives us high confidence that 2027 will be another strong growth year for Applied Materials,” Dickerson said. He added that the company has again raised its 2026 revenue growth forecast and expects to grow faster than the overall market. Dickerson highlighted leading-edge foundry and logic, DRAM, and advanced packaging as key areas of opportunity, saying they are expected to account for around 80% of wafer-fab equipment growth in 2026 and 2027. Applied expects its packaging revenue to grow more than 70% in calendar 2026. The CEO also said Applied's investments in AI are on track to accelerate revenue growth and operating profit margins, with the technology being used across R&D, services, operations and other corporate functions. Applied Materials reported earnings per share (EPS) of $3.5 on revenue of $9.12 billion, beating expectations of an EPS of $3.39 on revenue of $9 billion, according to Fiscal.ai data. Retail sentiment on Stocktwits around Applied Materials trended in the ‘extremely bullish’ territory with message volumes at ‘extremely high’ levels at the time of writing. AMAT stock is up 108% year-to-date and 181% over the past 12 months. The S&P 500 ETF (SPY) is up 21% over the past 12 months, while the Invesco QQQ Trust (QQQ) is up 26%. Also See: BRUN Stock Soars After Securing Long-Term Lease To Expand GPU Compute Capacity — CEO Says 'This Gives Us Strong Visibility Into Recurring Revenue' For updates and corrections, email newsroom[at]stocktwits[dot]com. Rounak Jain has no position in any of the stocks mentioned in this article. StockTwits' news team content is for informational purposes only and is not intended as investment advice. For more, see our editorial policy. This article was originally published on StockTwits. Related: NVDA Discloses $21B Stake In SpaceX — Elon Musk’s Rocket Firm Becomes Nvidia’s No. 2 Holding Berkshire Hathaway Makes Alphabet Its No. 3 Holding After 48M Share Buy Berkshire Hathaway Makes Alphabet Its No. 3 Holding After 48M Share Buy

The artificial intelligence investment story is often dominated by chip designers, data-center operators, and cloud-computing companies. That said, Applied Materials AMAT) offers investors a different way to participate in the trend: it supplies many of the sophisticated manufacturing systems needed to produce advanced logic chips, high-bandwidth memory (HBM), and next-generation semiconductor packages. Despite posting record results for its fiscal third-quarter yesterday evening and providing encouraging guidance, AMAT shares fell 5% in Friday’s trading session. The reaction appears to reflect elevated expectations and some profit-taking after the stock has roughly doubled year to date and has now gained +260% in the last three years. Of course, investors shouldn’t assume that strong AI demand will automatically produce uninterrupted stock-price gains. Plus, a pullback in AMAT could end up being an appealing buying opportunity, especially for long-term investors. Image Source: Zacks Investment Research Applied Materials delivered record quarterly revenue of $9.11 billion, a 25% increase from $7.3 billion a year ago and topping Q3 estimates of $8.99 billion. It’s also noteworthy that Applied Materials delivered the highest sequential revenue growth in its history, as quarterly sales spiked nearly 15% from $7.91 billion in Q2. Furthermore, Q3 adjusted net income came in at $2.79 billion, or earnings of $3.50 per share, also a quarterly peak. This surged 41% from EPS of $2.48 in the prior year quarter and comfortably exceeded Wall Street’s expectations of $3.38. Image Source: Zacks Investment Research Profitability also improved. Non-GAAP operating margin reached 34%, up 3.3 percentage points, with Semiconductor Systems and Applied Global Services operating margins increasing to 38% and 30%, respectively. Meanwhile, non-GAAP free cash flow increased 14% to $2.33 billion. The company also generated a record $3.04 billion in operating cash flow and returned $860 million to shareholders through dividends and share repurchases. Needless to say, these numbers suggest that Applied Materials is not merely generating higher sales from the AI boom; it’s also converting that demand into stronger margins, earnings, and cash flow. Image Source: Applied Materials Investor Relations Applied Materials’ opportunity extends well beyond the equipment used to manufacture AI accelerators. Modern AI systems require HBM, more advanced transistors, chiplets, hybrid bonding, and sophisticated packaging technologies that allow multiple components to operate together. Keeping that in mind, revenue from the company’s Semiconductor Systems division climbed to $7.04 billion from $5.56 billion a year earlier. Dynamic Random Access Memory (DRAM) accounted for 26% of the segment’s revenue, up from a 22% contribution last year, while foundry, logic, and other applications represented 67%. Management said DRAM revenue—including equipment associated with HBM packaging—grew 52% YoY to a record level. More intriguingly, Applied Materials now expects its overall advanced-packaging revenue to grow by more than 70% during calendar 2026. That is important because advanced packaging is becoming a critical performance driver for AI computing. When improvements from traditional transistor scaling become more difficult and expensive, chipmakers increasingly rely on packaging, interconnect, and chiplet innovations to increase computing power and energy efficiency. Applied Materials is positioning itself for these trends with new systems for DRAM, HBM, and advanced packaging that are seeing strong demand from leading semiconductor manufacturers such as Taiwan Semiconductor TSM), Samsung, Micron MU), and SK Hynix SKHY). Notably, its recent product introductions include equipment designed to improve transistor efficiency, copper plating, wafer polishing, defect inspection, and yield control in complex HBM and chiplet structures. Applied Materials has now recorded 13 consecutive quarters of YoY gross-margin expansion. In the latest quarter, companywide non-GAAP gross margin reached 50.4%, while the Semiconductor Systems division posted a non-GAAP gross margin of 55.4%. The company is also benefiting from its Applied Global Services business, which provides parts, maintenance, subscriptions, and productivity services for its installed equipment base. During Q3, Services revenue rose to a record $1.78 billion, up 22% year over year, while the segment’s operating margin improved to 30%, as previously mentioned. This services operation gives Applied Materials a valuable source of revenue beyond new equipment purchases. As more of its systems are installed in semiconductor factories, Applied Materials gains additional opportunities to sell maintenance, replacement parts, software, and performance-optimization services. On a trailing twelve-month basis (TTM), you can see that AMAT’s gross margins have spiked to a decade-long peak of roughly 49%. Image Source: Zacks Investment Research Applied Materials expects fiscal fourth-quarter revenue of approximately $10.25 billion, plus or minus $500 million. Adjusted earnings are projected at $4.02 per share, plus or minus $0.20. Both midpoints were above Wall Street's consensus estimates. Management also raised its expectations for Semiconductor Systems revenue and stated increased customer visibility supports another strong growth year in FY27. The company is expanding its manufacturing capacity to meet projected demand through the end of the decade and aims to support roughly twice its current quarterly Semiconductor Systems output by 2028. That investment does not guarantee future demand, but it indicates that customers are discussing capacity requirements several years in advance rather than treating AI infrastructure spending as a short-lived cycle. Applied Materials’ capital allocation strategy balances two priorities: funding the innovation and infrastructure required for long-term growth while returning excess cash to shareholders through dividends and share repurchases. The company’s track record suggests that these goals have been complementary rather than competing. As referenced in the chart below, over the last 10 fiscal years through FY25, Applied Materials reinvested nearly $25 billion in research and development (R&D) and more than $8 billion in capital additions. This growth-first approach is particularly important in semiconductor equipment, where sustained investment is required to develop new manufacturing technologies and support increasingly complex chip architectures. As spending on AI processors, HBM and advanced packaging expands, Applied Materials’ R&D and infrastructure investments should help the company maintain its technological relevance and respond to customers’ capacity requirements. At the same time, Applied Materials has distributed nearly 90% of its free cash flow to shareholders. Its quarterly dividend per share grew at a compound annual rate of approximately 16% over the last 11 years, reaching $0.53 this year. That represents more than double the $0.26 quarterly dividend paid in FY22, highlighting its confidence in cash-generation capacity and commitment to delivering a steadily rising income stream. Image Source: Applied Materials Investor Relations Also illustrated in the above chart, share repurchases have been the other major component of the company’s shareholder-return program. Applied Materials reduced its fiscal year-end share count by approximately 32% between fiscal 2015 and FY25. A smaller share base allows revenue, earnings, and free cash flow to be spread across fewer shares, supporting faster growth in per-share results. The long-term reduction shown in the chart indicates that repurchases have been a consistent element of the company’s strategy rather than an occasional response to market conditions. Overall, Applied Materials appears to be using its cash flow in a disciplined order: first investing in research, product development, and operating capacity, and then returning surplus capital through a growing dividend and buybacks. This combination gives investors exposure to future semiconductor and AI-related growth while also providing tangible shareholder returns. Applied Materials combines several qualities that make it stand out among AI-related investments: exposure to advanced logic, HBM, DRAM, and semiconductor packaging; improving margins; a growing services operation; significant free-cash-flow generation; and increasing visibility into customer demand. Although the stock is neither inexpensive nor risk-free at over $500 a share and 43X forward earnings, its record Q3 results demonstrate that Applied Materials is successfully translating the AI infrastructure boom into higher revenue, profits, and cash flow. For investors seeking diversified exposure to the equipment and materials behind next-generation AI chips, AMAT remains one of the strongest semiconductor stocks to consider and currently sports a Zacks Rank #1 (Strong Buy). Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Applied Materials, Inc. (AMAT) : Free Stock Analysis Report Micron Technology, Inc. (MU) : Free Stock Analysis Report Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report SK Hynix, Inc. - Sponsored ADR (SKHY) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research