Applied Materials posts record Q3, guides to $10.25B on AI demand
The AI buildout's earnings parade keeps producing record quarters — and the market keeps asking for more. Applied Materials delivered its best-ever results Thursday and raised its outlook, and its stock still slipped.
Applied Materials posted record fiscal third-quarter revenue of $9.12 billion, up 25% year over year, as AI demand for chipmaking equipment overwhelmed supply — then guided fourth-quarter revenue to roughly $10.25 billion, up 51% from a year earlier and ahead of analyst forecasts. Net income rose 43% to $2.54 billion, non-GAAP earnings hit $3.50 per share (up 41%), gross margin reached 50.4%, and operating margin set a record at 34%. CEO Gary Dickerson called it the highest sequential revenue growth in the company's history — the quarter grew 15% over Q2 — and credited "the rapid global adoption of AI" for unprecedented demand for its materials-engineering tools. The company lifted its calendar 2026 growth outlook to more than 30%, raised its 2027 forecasts, and said it plans to double manufacturing capacity by 2028, with rolling forecasts giving it visibility toward 2030.
Applied Materials is the gatekeeper of the silicon layer: TSMC, Samsung, and Intel use its deposition, etch, and inspection tools to build the nanometer-scale structures inside AI accelerators, and the advanced packaging that stacks memory beside them. As the buildout's constraint shifts from GPUs to the equipment and materials that make them, this order book is the clearest public gauge of whether the AI capex cycle has legs — and a raised 2027 outlook says chipmakers are committing to capacity years out.
The market's reaction is the more telling signal. Even a beat-and-raise wasn't enough: shares fell on the news, with Barron's summing up earnings that "weren't quite good enough" after a roughly 200% run into the print. It's the same beat-and-drop pattern we saw with Cerebras beats and raises outlook — stock plunges 12% anyway — the AI trade is priced for perfection, and record results are now just the baseline. The other shoe is geographic: a significant share of Applied Materials' sales comes from China, so the equipment boom carries export-control and geopolitical risk on top of the usual cyclical risk.
What to watch: whether that 2027 visibility holds as HBM and advanced-packaging capacity comes online, and whether "sell the news" keeps hitting AI-infrastructure earnings.
The chip-tool makers are now the tell for the AI capex cycle — do you think equipment demand outlasts the current buildout? Tell us in the comments.
Sources: Applied Materials · WSJ via Techmeme · Barron's · MSN
