- Company name
- Applied Materials
- Sector
- Semiconductor equipment
- About
- Applied Materials makes the equipment that chipmakers use to deposit, etch, change and measure the thin layers of material on silicon wafers. It has two segments. Semiconductor Systems sells equipment for foundry and logic, DRAM and flash memory chips, and for advanced packaging. Applied Global Services sells spare parts, upgrades and services for the installed base of equipment. A smaller display business is in its Other category. Revenue was a record $34.45 billion in fiscal 2026, which ended on October 25, 2026. In Q4 fiscal 2026, Semiconductor Systems had revenue of $8.00 billion and Applied Global Services had revenue of $1.90 billion. Its fiscal year ends on the last Sunday of October.
- Thesis
- The market prices Applied Materials as a cyclical supplier whose record results depend on a peak in chip equipment spending. AI demand drove record revenue of $34.45 billion in fiscal 2026 and $10.41 billion in Q4, and the company guided Q1 fiscal 2027 revenue of $11.10 billion, plus or minus $500 million. But chipmakers can cut equipment orders quickly, as they did in past cycles. China gave 25% of Q4 revenue, and U.S. export rules can lower these sales further. A U.S. rule that extends export limits to companies that listed parties own is suspended only until January 10, 2027. For the gap to close, three things must be true. Sales for DRAM, leading-edge logic and advanced packaging must grow more than sales to China fall. Gross margin must keep rising. It rose year over year again in Q4 fiscal 2026, to 50.4% from 48.0%. Revenue must keep growing in fiscal 2027 after the record year of 2026. The end of the export rule suspension on January 10, 2027 and the Q1 fiscal 2027 report, which Applied has not dated yet, are the next tests. If these checks pass, the gap can close over the next four to six quarters. The main reason it may not close is a fall in chip equipment spending, which can lower revenue and margins at the same time.
- Risks
- Chip equipment spending is cyclical. Record revenue in 2026 depends on AI spending by chipmakers and their customers. If AI spending or memory prices fall, chipmakers can cut orders quickly, and revenue and margins can fall together.
China gave 25% of revenue in Q4 fiscal 2026 and 27% in fiscal 2026. U.S. export rules already limit sales to many Chinese customers, and the government can add more limits. A rule that extends these limits to companies that listed parties own is suspended only until January 10, 2027.
The 2026 settlement with the U.S. Department of Commerce requires export compliance audits for three years. If Applied does not meet these terms, the suspended denial order can take effect and stop some exports.
A small number of large chipmakers in Taiwan, Korea, the United States and China buy most of the equipment. A delay of one large factory project can lower revenue for several quarters.
China controls the export of rare earth minerals that some Applied products use. More controls can delay parts and raise costs.
- Balance sheet
- Cash: $9.3B
Debt: $6.5B
Net cash: $2.8B
Interest cover: 54×
Undrawn credit line: $2.0B, to February 2030
Debt due within 12 months: $1.3B
Last debt due: 2050
Applied Materials has more cash and investments than debt. At October 25, 2026, cash and cash equivalents were $7.24 billion and short-term investments were $2.10 billion. Long-term investments of $4.76 billion, which include strategic stakes such as Besi, are not in the cash figure. Short-term debt was $1.30 billion and long-term debt was $5.23 billion. The Q3 10-Q listed $6.50 billion of senior unsecured notes due from 2027 to 2050 and $100 million of commercial paper at July 26, 2026, and the $1.20 billion of 3.342% notes due in 2027 were current debt. Interest cover is GAAP operating income of $3.66 billion divided by interest expense of $68 million for Q4 fiscal 2026. The 10-Q also listed a $2.0 billion five-year revolving credit facility to February 2030 and a $2.0 billion 364-day facility, with no borrowings. Free cash flow was $2.62 billion in Q4 fiscal 2026 and $6.20 billion in fiscal 2026, after capital spending of $2.67 billion. In fiscal 2026, the company paid $3.18 billion for share buybacks and $1.57 billion for dividends.
As of Oct 25, 2026.
- Checkpoints
- Nov 12, 2026: Q4 fiscal 2026 results and fiscal 2027 outlook. Passed. Watch: Revenue near the $10.25 billion guidance and a view of strong growth in fiscal 2027 pass; revenue below the range or a weaker 2027 view fail. Outcome: Revenue was a record $10.41 billion, and the company guided Q1 fiscal 2027 revenue of $11.10 billion and said that it is in a great position for multi-year revenue and profit growth.
Nov 2026: U.S. export rule for affiliates of listed parties. Passed. Watch: An extension of the suspension or no new loss of China sales passes; a return of the rule that cuts sales to more Chinese customers fails. Outcome: On November 9, 2026, the Bureau of Industry and Security extended the suspension of the rule, but only to January 10, 2027.
Q4 2026 (estimate): Besi stake of about 20%. Pending. Watch: The share purchase closes after the U.S. antitrust waiting period and the partnership in hybrid bonding grows; a block or a cancelled purchase fails.
Jan 10, 2027: End of the extended suspension of the affiliates export rule. Pending. Watch: A further extension or a permanent end of the rule passes; a return of the rule on January 10, 2027 that cuts sales to more Chinese customers fails.
Feb 12, 2027 (estimate): Q1 fiscal 2027 results. Pending. Watch: Revenue of $11.10 billion, plus or minus $500 million, and non-GAAP EPS of $4.35, plus or minus $0.20, pass; revenue or EPS below the range fails.
- Recent events
- Nov 12, 2026: Applied Materials reported Q4 fiscal 2026 results. Revenue was a record $10.41 billion, up 53%. GAAP EPS was $3.40, and non-GAAP EPS was a record $4.16, up 92%. Non-GAAP gross margin was 50.6%. For fiscal 2026, revenue was a record $34.45 billion, up 21%, and non-GAAP EPS was a record $12.89, up 37%. China gave 25% of Q4 revenue, down from 29% a year earlier. In Q4 the company bought back $2.00 billion of its shares and paid $421 million in dividends. It said that it is on track to grow Semiconductor Systems more than 40% in calendar 2026. It guided Q1 fiscal 2027 revenue of $11.10 billion, plus or minus $500 million, and non-GAAP EPS of $4.35, plus or minus $0.20.
Nov 9, 2026: The U.S. Bureau of Industry and Security extended the suspension of its rule that adds export limits for affiliates of listed parties, which are companies at least 50% owned by them. The suspension was to end on November 9, 2026, and now runs to January 10, 2027.
Oct 26, 2026: Applied Materials agreed to buy more shares of BE Semiconductor Industries (Besi), a maker of chip assembly equipment, including hybrid bonding. With its existing stake from April 2025, it will own about 20% of Besi. The purchase must first clear the U.S. antitrust waiting period. Applied said that it does not intend to buy more than about 20% or to ask for a board seat.
Oct 22, 2026: Applied Materials said that it will hold its Q4 fiscal 2026 earnings call on November 12, 2026, at 4:30 p.m. ET.
Aug 27, 2026: Applied Materials added Akash Palkhiwala, the CFO and COO of Qualcomm, to its board of directors and its audit committee.
Aug 13, 2026: Applied Materials reported Q3 fiscal 2026 results. Revenue was a record $9.12 billion, up 25%. GAAP EPS was $3.17, and non-GAAP EPS was a record $3.50, up 41%. Non-GAAP gross margin was 50.4%. China gave 28% of revenue, down from 35% a year earlier. The company raised its view of 2026 revenue for Semiconductor Systems and said that it expects another strong growth year in 2027. It guided Q4 fiscal 2026 revenue of $10.25 billion, plus or minus $500 million, and non-GAAP EPS of $4.02, plus or minus $0.20.
May 14, 2026: Applied Materials reported Q2 fiscal 2026 results. Revenue was a record $7.91 billion, up 11%, and non-GAAP EPS was a record $2.86. The company said that it expects its semiconductor equipment business to grow more than 30% in calendar 2026. It raised the quarterly dividend by 15% to $0.53 per share.
Feb 12, 2026: Applied Materials reported Q1 fiscal 2026 results. Revenue was $7.01 billion, down 2%, with record DRAM revenue. Non-GAAP EPS was $2.38, flat from a year earlier.
Feb 11, 2026: Applied Materials agreed to pay $252.5 million to the U.S. Department of Commerce to settle claims that some shipments to China from November 2020 to July 2022 did not follow U.S. export rules. The Department of Justice and the SEC closed their related investigations without action. The settlement includes internal audits and a denial order that is suspended and will be waived after three years if the audits are complete.
Nov 13, 2025: Applied Materials reported Q4 fiscal 2025 results. Revenue for fiscal 2025 was a record $28.37 billion, up 4%, and non-GAAP EPS was a record $9.42. The company said that it expects higher demand from the second half of calendar 2026.