Applied Materials posts record quarter as AI chip demand surges
Applied Materials reported record fourth-quarter revenue of $10.41 billion, up 53%, and forecast first-quarter sales above estimates as AI chip demand stays strong.
Record revenue and a big beat
Applied Materials reported record fiscal fourth-quarter revenue of $10.41 billion, up 53% from $6.80 billion a year earlier. Adjusted earnings reached $4.16 a share, up 92% from $2.17, beating the $4.06 analysts expected, while revenue topped the $10.30 billion average estimate.
Net income rose 43% to $2.72 billion, or $3.40 a share on a GAAP basis, up from $1.90 billion a year earlier. Non-GAAP gross margin reached 50.6%, up 250 basis points from a year earlier, and record operating income was $3.68 billion, or 35.3% of revenue.
Chipmaking equipment leads the growth
Semiconductor Systems, the division that sells the machines chipmakers use to build advanced processors, produced $7.996 billion in quarterly revenue, up 64% from $4.879 billion a year earlier. Foundry and logic customers generated 58% of the segment's revenue, DRAM customers 33% and flash memory 9%.
Applied Global Services, which supports chipmakers' installed equipment, reported revenue of $1.896 billion. For the full fiscal year, Semiconductor Systems revenue reached a record $26.142 billion, part of record annual revenue of $34.45 billion, up 21% from the prior year.
- Quarterly revenue$10.41 billion, up 53%
- Adjusted EPS$4.16, up 92%
- Semiconductor Systems$7.996 billion, up 64%
- Next-quarter revenue outlookAbout $11.10 billion
- Full-year revenue$34.45 billion, up 21%
Guidance above estimates
For the first quarter of fiscal 2027, Applied Materials forecast revenue of about $11.10 billion, plus or minus $500 million, and adjusted earnings of $4.35 a share, plus or minus $0.20. Both figures sit above Wall Street expectations of $10.89 billion in revenue and $4.25 a share in adjusted earnings, according to data compiled by LSEG.
Chief executive Gary Dickerson said the company is on track to grow its Semiconductor Systems business by more than 40% in calendar 2026, adding that "AI continues to fuel strong incremental demand for semiconductors." The company also unveiled its EPIC Center in Silicon Valley and added four research partnerships, bringing its total to 15.
A record year for cash and returns
For the full fiscal year, Applied Materials generated record cash from operations of $8.87 billion and record quarterly free cash flow of $2.6 billion. The company returned $2.42 billion to shareholders in the quarter through $2.00 billion in share repurchases and $421 million in dividends.
Full-year non-GAAP earnings reached $12.89 a share, up 37% from a year earlier, while GAAP earnings were $12.62, up 46%. Shares fell 3.6% to $380.95 in the regular session before the results, then steadied after hours.
