Applied Materials (AMAT), a global semiconductor equipment giant, recently released its latest financial report and performance outlook, with robust data shocking the market. The company’s revenue guidance for the second quarter of fiscal year 2026 is as high as $7.65 billion, significantly surpassing the average Wall Street analyst estimate of $7.03 billion. Its earnings per share outlook range also reached $2.44 to $2.84, again exceeding the market expectation of $2.29. Boosted by this news, Applied Materials’ stock price surged over 14% in after-hours trading.
Although revenue for the first fiscal quarter slightly decreased by 2% year-over-year to $7.01 billion, the decline was much smaller than the company’s previous forecast and significantly stronger than the analysts’ estimate of $6.86 billion.
Applied Materials CEO Dickerson stated in a release that investments in the global AI computing field are accelerating, driving the company’s performance towards a strong growth trajectory. During the earnings conference call, he specifically emphasized that demand for High Bandwidth Memory (HBM) is the most critical driver at present. HBM, a high-performance memory device used in conjunction with AI GPUs and TPU chips, has complex manufacturing processes that are substantially increasing demand for semiconductor equipment.
As the three major memory manufacturers—SK Hynix, Samsung Electronics, and Micron Technology—shift the majority of their production capacity towards HBM systems, traditional memory products are actually experiencing supply shortages. The CEO of Micron previously revealed that all HBM capacity for fiscal year 2026 has already been sold out, and projects the potential HBM market size to reach $100 billion by 2028. Applied Materials’ etching and deposition tools used in DRAM manufacturing continue to gain market share due to strong demand from AI chip customers.
Stricter export controls continue to have a material impact on the company, expected to result in a revenue loss of approximately $600 million in fiscal year 2026. The company also announced plans to reduce its global workforce by 4%.
Nevertheless, Applied Materials is staging a strong rebound from the growth slowdown caused by export restrictions to China. The stock price has risen 28% so far this year, although this gain still lags behind peers such as Lam Research and KLA Corporation. Notably, following Applied Materials’ strong outlook, the stock prices of several other semiconductor equipment companies also received a boost in after-hours trading. With TSMC significantly raising its fiscal year 2026 capital expenditure guidance to a range of $52 billion to $56 billion and raising its expected revenue compound annual growth rate for AI-related foundry business to the “mid-to-high 50% range,” the long-term growth logic for the semiconductor equipment sector is becoming increasingly clear.
