Applied Materials (NASDAQ:AMAT) Posts Quarterly Earnings Results, Beats Expectations By $0.10 EPS

Key Points

• Applied Materials beat quarterly expectations: The company reported $3.50 in EPS versus the $3.40 consensus and $9.12 billion in revenue versus $8.99 billion expected.
• Management raised its growth outlook on robust AI-infrastructure demand, forecasting strong fiscal fourth-quarter revenue and EPS growth and continued momentum into 2027.
• Despite the earnings beat and upbeat outlook, shares fell about 2.5% as investors weighed elevated valuation, potential margin pressure from hiring and training costs, and other concerns including China exposure.

Applied Materials (NASDAQ:AMAT - Get Free Report) announced its quarterly earnings data on Thursday. The manufacturing equipment provider reported $3.50 EPS for the quarter, topping analysts' consensus estimates of $3.40 by $0.10, FiscalAI reports. The firm had revenue of $9.12 billion for the quarter, compared to the consensus estimate of $8.99 billion. Applied Materials had a return on equity of 36.97% and a net margin of 29.31%. Applied Materials updated its Q4 2026 guidance to 3.820-4.220 EPS.

Here are the key takeaways from Applied Materials' conference call:

• Applied Materials raised its growth outlook, citing stronger-than-expected AI infrastructure demand, customer fab additions, and longer-term commitments. Management now expects 2026 systems growth above its prior “greater than 30%” forecast and another strong growth year in 2027.
• Fiscal Q3 delivered records across key metrics, including $9.1 billion of revenue, $3.50 in non-GAAP EPS, 50.4% gross margin, and 34% operating margin. Fiscal Q4 guidance calls for $10.25 billion of revenue and $4.02 of non-GAAP EPS, representing year-over-year growth of 51% and 85%, respectively.
• Growth is concentrated in Applied’s strongest businesses: DRAM revenue rose 52% year over year, advanced packaging revenue is expected to grow more than 70% in calendar 2026, Applied Global Services is expected to grow more than 20%, and process diagnostics and control more than 50%. Management also sees ICAPS returning to growth next year.
• Applied is expanding manufacturing and support capacity to potentially double quarterly system output from current levels by 2028, adding more than 1,500 employees this quarter. The company also reported $2.3 billion of free cash flow and plans to return 80%-100% of free cash flow to shareholders.
• Near-term margin expansion may be restrained by ramp costs from hiring and training employees, while display revenue is expected to create an unfavorable mix effect. Management also expects a higher global-minimum-tax burden in 2027, with the tax rate rising to approximately 13% from about 11% currently.

Applied Materials Trading Down 2.5%

Shares of NASDAQ AMAT traded down $13.61 during mid-day trading on Thursday, reaching $534.54. 12,728,254 shares of the company's stock were exchanged, compared to its average volume of 8,229,762. The firm has a market capitalization of $424.40 billion, a price-to-earnings ratio of 50.19, a PEG ratio of 1.33 and a beta of 1.61. The company has a debt-to-equity ratio of 0.22, a quick ratio of 1.80 and a current ratio of 2.51. Applied Materials has a 52-week low of $154.46 and a 52-week high of $739.67. The company's 50-day moving average is $563.06 and its 200-day moving average is $444.45.

Applied Materials Announces Dividend

The firm also recently declared a quarterly dividend, which will be paid on Thursday, September 10th. Stockholders of record on Thursday, August 20th will be paid a $0.53 dividend. This represents a $2.12 annualized dividend and a dividend yield of 0.4%. The ex-dividend date of this dividend is Thursday, August 20th. Applied Materials's dividend payout ratio is 19.91%.

Key Headlines Impacting Applied Materials

Here are the key news stories impacting Applied Materials this week:

• Positive Sentiment: Results exceeded expectations: Applied Materials reported adjusted earnings of $3.50 per share, above the $3.40 consensus estimate, while revenue reached $9.12 billion versus expectations of $8.99 billion. Revenue growth was supported by continued demand for semiconductor equipment tied to artificial-intelligence infrastructure. Applied Materials Announces Third Quarter 2026 Results
• Positive Sentiment: Optimistic fourth-quarter outlook: Management guided to fiscal fourth-quarter EPS of $3.82–$4.22 and revenue of $9.8 billion–$10.8 billion, both above Wall Street estimates of $3.65 per share and $9.5 billion in revenue. The forecast reflects management’s view that demand for advanced AI chips remains robust. Applied Materials forecasts quarterly revenue above estimates
• Neutral Sentiment: AI remains the central investment theme: Analysts and investors continue to view Applied Materials as a key “picks-and-shovels” supplier to the AI chip industry. The company’s research collaboration with UC Berkeley and broader semiconductor R&D efforts add support to its long-term technology positioning, although these initiatives are unlikely to materially affect near-term results. Investors react to Applied Materials expanding its AI chip R&D
• Negative Sentiment: High expectations pressured the stock: AMAT fell in late trading despite the earnings beat and raised outlook. Coverage pointed to the demanding expectations following a substantial year-to-date rally, with investors potentially concerned about valuation, margin pressure and the company’s China exposure. A put-to-call ratio above 1 also indicated cautious positioning ahead of the report. Why Applied Materials Stock Is Down After Hours

Analysts Set New Price Targets

Several brokerages have issued reports on AMAT. Seaport Research Partners initiated coverage on Applied Materials in a research note on Monday, May 4th. They issued a "buy" rating and a $500.00 target price for the company. Wall Street Zen cut shares of Applied Materials from a "buy" rating to a "hold" rating in a research report on Saturday, August 1st. HC Wainwright set a $850.00 price objective on shares of Applied Materials in a report on Monday, June 29th. HSBC restated a "buy" rating and set a $683.00 price objective on shares of Applied Materials in a research report on Monday, July 27th. Finally, Sanford C. Bernstein reaffirmed an "outperform" rating and set a $525.00 target price on shares of Applied Materials in a research note on Friday, May 15th. One equities research analyst has rated the stock with a Strong Buy rating, twenty-six have assigned a Buy rating and eight have assigned a Hold rating to the company's stock. According to data from MarketBeat.com, the stock has a consensus rating of "Moderate Buy" and an average target price of $603.23.

Insider Transactions at Applied Materials

In related news, CEO Gary E. Dickerson sold 20,000 shares of the business's stock in a transaction dated Tuesday, June 30th. The shares were sold at an average price of $735.22, for a total value of $14,704,400.00. Following the sale, the chief executive officer directly owned 1,599,843 shares in the company, valued at approximately $1,176,236,570.46. The trade was a 1.23% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this link. Also, Director Thomas J. Iannotti sold 9,250 shares of the company's stock in a transaction dated Tuesday, June 16th. The shares were sold at an average price of $599.77, for a total transaction of $5,547,872.50. Following the completion of the transaction, the director directly owned 40,559 shares in the company, valued at $24,326,071.43. The trade was a 18.57% decrease in their position. The SEC filing for this sale provides additional information. Insiders sold 278,088 shares of company stock worth $169,654,805 in the last 90 days. Insiders own 0.30% of the company's stock.

Hedge Funds Weigh In On Applied Materials

Hedge funds have recently made changes to their positions in the stock. Morgan Stanley raised its position in Applied Materials by 3.4% in the fourth quarter. Morgan Stanley now owns 11,470,835 shares of the manufacturing equipment provider's stock valued at $2,947,891,000 after purchasing an additional 373,012 shares during the period. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC boosted its position in shares of Applied Materials by 617.2% during the third quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC now owns 9,129,483 shares of the manufacturing equipment provider's stock worth $1,869,170,000 after buying an additional 7,856,576 shares during the period. Coatue Management LLC boosted its position in shares of Applied Materials by 78.7% during the fourth quarter. Coatue Management LLC now owns 5,984,332 shares of the manufacturing equipment provider's stock worth $1,537,913,000 after buying an additional 2,635,284 shares during the period. Price T Rowe Associates Inc. MD grew its stake in shares of Applied Materials by 18.5% in the fourth quarter. Price T Rowe Associates Inc. MD now owns 5,384,256 shares of the manufacturing equipment provider's stock valued at $1,383,701,000 after buying an additional 840,486 shares in the last quarter. Finally, Charles Schwab Investment Management Inc. grew its stake in shares of Applied Materials by 0.4% in the fourth quarter. Charles Schwab Investment Management Inc. now owns 4,882,209 shares of the manufacturing equipment provider's stock valued at $1,254,679,000 after buying an additional 21,468 shares in the last quarter. Hedge funds and other institutional investors own 80.56% of the company's stock.

Applied Materials Company Profile

Applied Materials, Inc is a U.S.-based supplier of equipment, services and software used to manufacture semiconductor chips, flat panel displays and other advanced materials. Headquartered in Santa Clara, California, the company designs and sells capital equipment and related technologies that enable production of integrated circuits, display panels and materials used across the electronics supply chain.

Applied Materials' offerings include process equipment and factory software that support critical steps in device fabrication, such as deposition, etch, implantation, inspection and metrology, as well as systems for packaging and advanced heterogeneous integration.

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