Applied Materials Raises Its 2026 Equipment Outlook to More Than 30% Growth — and the Stock Still Fell

by Karl Lindström · August 13, 2026

Semiconductors & Hardware Reporter, Frontier Tech Wire

Applied Materials (Nasdaq: AMAT) reported fiscal third-quarter results after Thursday's close that beat on every headline line and came with a fourth-quarter forecast well above what Wall Street had modelled. According to the company's press release, revenue reached $9.115 billion, up 25 percent from a year earlier, with GAAP earnings of $3.17 a share, up 43 percent, and non-GAAP earnings of $3.50 a share, up 41 percent. Benzinga reported that analysts had been looking for roughly $8.99 billion in revenue and $3.40 in adjusted earnings.

The guidance was the larger surprise. Applied told investors to expect fourth-quarter revenue of $10.250 billion, plus or minus $500 million, and non-GAAP diluted earnings of $4.02 a share, plus or minus 20 cents. Benzinga put the corresponding consensus at about $9.54 billion in revenue and $3.69 in adjusted earnings, meaning the midpoint of the company's own range sits some $700 million above where the sell side had been. In the prepared remarks posted to its investor site, the company said fourth-quarter Semiconductor Systems revenue should land near $7.9 billion, a 62 percent increase from the same quarter a year ago.

The single most load-bearing number of the evening had its specifics attached only on the call. The press release signalled the direction — Dickerson said in it that Applied is further raising its Semiconductor Systems revenue expectations for calendar 2026 — but the figures came later, when management told analysts it now expects calendar-2026 Semiconductor Systems growth of more than 30 percent, up from a prior view of more than 20 percent, according to Investing.com's transcript of the call. That is a mid-cycle revision of the kind equipment companies rarely make twice in a year, and it reframes 2026 from a recovery year into an expansion year for wafer fab equipment spending.

Segment detail underneath the total shows where the money is coming from. Semiconductor Systems contributed $7.040 billion of third-quarter revenue, Applied Global Services $1.781 billion, and the display and other category $294 million. Gross margin was 50.3 percent on a GAAP basis and 50.4 percent adjusted; operating margin was 33.7 percent GAAP and 34.0 percent adjusted. Investing.com's transcript summary put the adjusted gross margin improvement at about 150 basis points year over year and the operating margin gain at roughly 330 basis points.

Chief financial officer Brice Hill framed the margin story in the release as a streak. His statement read, in full: "Applied Materials achieved its 13th consecutive quarter of year-over-year gross margin expansion, demonstrating the increasing value we create by enabling better chips, systems and fab returns. We expect continued strong revenue growth in the second half of the calendar year, particularly in DRAM as well as leading-edge foundry-logic and advanced packaging. Looking further ahead, we are making additional manufacturing capacity investments to support projected demand through the end of the decade."

The prepared remarks put numbers behind the memory claim. DRAM revenue, which the company said includes high-bandwidth memory packaging, grew 52 percent year over year to record levels in the quarter, and Applied expects a very significant increase in DRAM revenue in the second half of the calendar year. Overall packaging revenue is expected to grow more than 70 percent in calendar 2026. Taken together, the company said leading-edge foundry-logic, DRAM and advanced packaging should account for roughly 80 percent of wafer fab equipment market growth across 2026 and 2027 — a concentration that leaves little room for the trailing-edge and display businesses to matter much to the trajectory.

The most striking operational commitment was on the supply side. Applied said it plans to double its quarterly system output from current levels by 2028. Pressed on the call about whether that implied a specific revenue figure, Hill cautioned that the answer was more nuanced and that the capacity plan should not be read as a revenue forecast for 2028, according to Investing.com's transcript. Management also described customers now supplying rolling eight-quarter forecasts, with some planning conversations reaching out to 2030. That is unusual visibility for an industry whose historical failure mode is ordering equipment at the top.

China remains a large and politically exposed slice of the mix. The press release put China at 28 percent of total third-quarter revenue, or $2,506 million of the $9,115 million total. On the call, the company said China represented 26 percent of Semiconductor Systems plus Applied Global Services revenue and is expected to increase in calendar 2026, led by investments in 28-nanometer foundry-logic. Chief executive Gary Dickerson's statement in the release read, in full: "Applied Materials delivered another record-breaking quarter, including the highest sequential revenue growth in the company's history. As the rapid global adoption of AI drives unprecedented demand for our materials engineering solutions, we are further raising our Semiconductor Systems revenue expectations for calendar 2026 and are confident we will grow faster than the market this year. Based on the increased demand visibility we are receiving from our customers, we expect another strong growth year for Applied Materials in 2027."

The tape disagreed, at least initially. Applied Materials closed Thursday's regular session at $534.54, down $13.61 or 2.48 percent, according to Yahoo Finance's earnings live blog. After the release, quotes drifted lower and kept drifting: Benzinga had the stock at $517.78 shortly after the numbers landed, about 3.1 percent below the close, while Investing.com's post-call summary had it at $506.51, roughly 5.2 percent below the close. Investing.com also noted the shares had gained about 109 percent year to date heading into the print, which is the simplest explanation for why a beat-and-raise met a shrug. Extended-hours prices are thin and are not the next day's open.

Thursday's broader tape was risk-on. The S&P 500 finished at 7,798.99, up 0.65 percent and a record close, while the Nasdaq Composite rose 0.81 percent to 26,803.03, the Dow added 0.13 percent to 53,839.99 and the Russell 2000 gained 0.24 percent to 3,052.85, also a record. Within semiconductors, TradingKey reported Micron Technology up 3.09 percent, SanDisk up 4.74 percent and Nvidia up 0.54 percent on the day, the three largest semiconductor names by turnover in its screen. TradingKey attributed Micron's move specifically to strong AI demand and tight memory supply, noting the session also carried competing headlines about Chinese capacity expansion — the same demand backdrop Applied is now planning factory capacity around.

For investors tracking the equipment cycle rather than a single quarter, three things are worth watching from here. The first is whether the raised calendar-2026 Semiconductor Systems growth rate survives contact with the fourth quarter, since it now embeds a DRAM ramp that has not fully arrived. The second is gross margin, which the company guided roughly flat sequentially and attributed to ramp and hiring costs; a capacity doubling by 2028 is not free. The third is China, where a rising revenue share sits alongside an export-control regime that can change without warning. Nothing here is investment advice, and none of these figures should be read as a forecast of the share price.