Applied Materials Guides to $11.1 Billion in Quarterly Revenue as Chip Equipment Demand Grows
Key Facts
Applied Materials reported record revenue of $10.41 billion for the fourth quarter of fiscal 2026, ended October 25, on November 12, up 53% year over year, and guided to revenue of $11.1 billion in the first quarter of fiscal 2027. The midpoint of the new guidance is above the average analyst estimate of $10.89 billion, according to LSEG data cited by Reuters. The company set a range of $500 million above or below its revenue forecast and adjusted diluted earnings per share of $4.35, plus or minus $0.20. The results reflect strong demand for semiconductor manufacturing equipment, as spending related to the expansion of AI applications continues. In the quarter, the company also beat market estimates for revenue and adjusted earnings per share, which came in at $4.16 versus the expected $4.06, according to Investing.com.
Chief Executive Gary Dickerson said, "AI continues to drive strong incremental demand for semiconductors," adding that the company is well positioned to deliver multi-year revenue and earnings growth. Management expects demand for chip manufacturing equipment to rise by more than 30% in 2027, Reuters reported. Management linked market growth to the supply chain's ability to scale up to meet demand. The company also said it expects growth of more than 40% in its Semiconductor Systems business during calendar 2026. These forecasts put the equipment business at the center of the growth trajectory the company has described, alongside spending on AI infrastructure.
Revenue in the Semiconductor Systems segment was $7.996 billion in the fourth quarter, compared with $4.879 billion in the same period of the prior fiscal year, an increase of about 64%. The Global Services segment generated $1.896 billion, up from $1.506 billion a year earlier. The figures show that chip manufacturing systems were the larger contributor of the two businesses cited in the results, while services added more revenue. For the full fiscal year, Applied Materials posted record revenue of $34.45 billion, up 21% from the prior year. The annual total provides context for the broader growth seen in the latest quarter.
Adjusted gross margin rose to 50.6% in the fourth quarter, from 48.1% in the year-earlier period. Adjusted free cash flow was $2.616 billion, compared with $2.043 billion, a year-over-year increase of 28%. The company also recorded $3.30 billion in cash from operations during the quarter. It returned $2.42 billion to shareholders through $2 billion in share buybacks and $421 million in dividends. The indicators show higher margins and cash generation alongside revenue growth.
China accounted for 25% of fourth-quarter revenue, compared with 29% in the year-earlier period, Reuters reported. But sales there rose about 35% to $2.64 billion, indicating that their value grew despite a lower share of total revenue. In after-hours trading on November 12, the stock was slightly higher, Reuters reported, while Investing.com cited a gain of about 1.5%. In the regular session, the stock closed at $380.95 on November 12, after closing at $395.08 the previous day, according to EL7 data. Reuters said the stock had risen about 48% since the start of 2026 as of the date of its report.
As part of its research investments, the company announced four new partners for its EPIC center, bringing the total number of announced partnerships to 15 as of November 12. The new group includes Intel, KIOXIA, Besi and the Samueli School of Engineering at the University of California, Los Angeles. The partnerships come as the company forecasts expanding demand for chip manufacturing equipment in 2027. The first quarter of fiscal 2027 begins with revenue guidance of $11.1 billion and adjusted earnings per share of $4.35 at the midpoint of the range. Investing.com analysts estimated quarterly revenue of $10.84 billion and earnings per share of $4.25, both below the midpoint of the company's guidance.