In the second fiscal quarter ended April 26, Applied Materials (AMAT) achieved revenue of $7.91 billion, an 11% year-over-year increase, surpassing the analyst consensus estimate of $7.65 billion. Net profit reached $2.81 billion, or $3.51 per share, a significant jump from $2.14 billion and $2.63 per share in the same period last year. Adjusted earnings per share were as high as $2.86, far exceeding market expectations of $2.66.
At the same time, the company’s earnings quality reached a historic level. Non-GAAP gross margin in the second fiscal quarter was 50%, up 80 basis points year-over-year, marking the highest level in more than 25 years. Non-GAAP operating margin expanded 140 basis points year-over-year to 32.1%. Chief Financial Officer Brice Hill noted that the core Semiconductor Systems segment’s gross margin is approaching 55%, benefiting from a “value-based pricing approach” for differentiated products and cost innovation in manufacturing.
By segment, the Semiconductor Systems group achieved record revenue of $5.97 billion, a 10% year-over-year increase. Driven by leading customers such as TSMC and Samsung transitioning to advanced gate-all-around nodes, revenue from foundry and logic chip equipment hit a new record. DRAM equipment revenue reached $1.8 billion, an 18% increase year-over-year. The Global Services business also performed strongly, with revenue up 17% year-over-year to $1.67 billion.
As the biggest highlight of this earnings report, the company expects third-quarter net revenue of approximately $8.95 billion (plus or minus $500 million), representing a year-over-year growth rate of nearly 23%, well above the analyst estimate of $8.09 billion. Adjusted earnings per share are expected to be $3.36 (plus or minus $0.20), a sharp increase of nearly 36% year-over-year. For calendar year 2026, the company expects semiconductor equipment revenue growth to exceed 30%, a significant upgrade from the previous forecast of “over 20%.” In advanced packaging, the company expects packaging revenue to surge more than 50% in 2026.
CEO Gary Dickerson said on the conference call that global AI adoption continues to accelerate, and demand hotspots are expanding from generative AI to “agentic AI,” which requires more CPU-intensive computing architectures, greatly boosting demand for DRAM and NAND memory chips. He revealed that large customers are currently providing rolling forecasts extending up to eight quarters, “a level of long-term visibility I have not seen in this industry.” Based on this, the company has already given a forecast for “another record year” in 2027.
A few days before the earnings release, Applied Materials announced a major co-innovation partnership with TSMC, under which the two parties will collaborate on technology acceleration at Applied Materials’ newly built “EPIC Center,” a facility requiring a $5 billion investment. Giants such as Samsung, Micron, and SK Hynix were subsequently announced as joining the collaboration. Additionally, through expansions in the United States, Europe, and Singapore, the company’s manufacturing capacity has nearly doubled over the past several years, ensuring it can support customers’ aggressive capacity expansion plans for the years ahead.
