Applied Materials posts a record quarter and calls for 30%+ equipment growth in 2027
Applied Materials reported record fiscal fourth-quarter revenue of $10.41 billion, up 53%, and non-GAAP earnings of $4.16 a share, up 92%, both ahead of consensus — then guided fiscal Q1 2027 to $11.1 billion and issued its first explicit call for 2027 wafer fab equipment growth above 30%.
📊 Scorecard: our Bullish call on $AMAT is scored from $380.95, the last close before it ran. Its first result comes after the next close.
The News
Applied Materials reported record fiscal fourth-quarter results after the close on Thursday, with revenue of $10.41 billion, up 53% from a year earlier and above the $10.30 billion analysts had expected. Non-GAAP earnings — profit measured without one-off items — came in at $4.16 a share, up 92% and ahead of the $4.06 consensus. On the standard accounting measure, GAAP earnings were $3.40 a share, held back by a $653 million unrealised loss on strategic investments — a paper loss on investments the company still holds, not cash that left the business.
The engine was Semiconductor Systems, the division that sells the machines chipmakers use to build chips. Its revenue rose 64% to $8.00 billion with a 39.0% non-GAAP operating margin — operating margin is the share of revenue left after the costs of running the business — and the company's overall non-GAAP operating margin hit a record 35.3%. Shares fell 3.58% in the regular session to $380.95 ahead of the print, giving back part of Wednesday's 6.05% rise to $395.08, though the result still missed one unofficial number: Earnings Whispers notes it beat the $4.06 consensus but came in below its $4.20 whisper number, the figure traders were watching.
The guidance was the bigger story. For fiscal Q1 2027, Applied guided to revenue of $11.1 billion, plus or minus $500 million, and non-GAAP earnings of $4.35 a share, plus or minus $0.20 — above the $10.89 billion average estimate from LSEG. Management now expects calendar 2026 Semiconductor Systems growth above 40%, with advanced packaging revenue up about 90% in 2026 on demand for the packaging used in high-bandwidth memory and AI chips. And it issued its first explicit call for 2027 wafer fab equipment growth: more than 30%, with Applied expecting to outperform the market again.
Applied is selling the picks and shovels of the AI buildout — and it just told the market next year will be bigger still.
Why It Matters
Chip equipment is the earliest signal in the semiconductor cycle. Chipmakers order machines months before they ship finished chips, so when the world's largest equipment maker reports record revenue and raises its guidance, it is telling you that its customers — the foundries and memory makers — expect demand to keep growing. Applied's 64% jump in Semiconductor Systems revenue is that signal at full volume.
The advanced packaging number is the AI story in miniature. Packaging revenue up about 90% in calendar 2026 means the chips that matter most right now — the ones paired with high-bandwidth memory inside AI systems — are being built at a pace the industry has not seen before. Applied plans to double its systems output by 2028 and more than double its manufacturing and lab capacity by 2030, which is a company betting its own factories on the cycle lasting.
The 2027 call is what makes this quarter different from a good print. Management's first explicit forecast of more than 30% growth in wafer fab equipment — the total market for chipmaking machines — gives the whole equipment sector a number to aim at, and Applied says it expects to outperform the market again. That is a forward claim, not a backward one, and it is why the print matters beyond the quarter itself.
There are two honest caveats. Cleanroom availability — the ready-to-use factory space where new equipment is installed — is the governing constraint on 2027 equipment growth, and supply-chain pinch points are already modestly limiting the fiscal Q1 guide. And the $4.20 whisper number miss shows expectations had run ahead of even a record print. Neither changes the direction of the story, but both set the bar for the next quarter: Applied now has to deliver against its own 30% call.
Analyst's Take
Our call is Bullish. A record quarter is good; a record quarter plus a raised guide plus a first-ever explicit 2027 growth call is the kind of quarter that resets expectations for a whole sector. The 53% revenue jump and the record 35.3% non-GAAP operating margin show Applied is not just selling more machines — it is selling them at better margins, because demand for the tools that build AI chips is outrunning supply.
What to watch: whether Applied hits the $11.1 billion fiscal Q1 guide and whether cleanroom availability — the ready-to-use factory space that limits how fast new equipment can be installed — really does cap 2027 growth, as management says. The whisper-number miss is a footnote, not a warning: the consensus beat and the above-30% 2027 call matter far more. If the 2027 wafer fab equipment market does grow more than 30%, equipment peers Lam Research and KLA, and big customer TSMC, all ride the same wave — which is why those names are the read-throughs here.
Are you bullish or bearish on this story?
By The Numbers
FAQ
What is wafer fab equipment?
Wafer fab equipment is the machinery used to build computer chips — the tools that etch, deposit and package silicon inside fabrication plants, known as fabs. Applied Materials is the world's largest maker of this equipment, so its orders and guidance are read as a signal for the whole chip industry.
What does non-GAAP mean?
Non-GAAP earnings strip out one-off items to show the underlying business. Applied's non-GAAP earnings were $4.16 a share; its GAAP earnings — the standard accounting measure — were $3.40, held back by a $653 million unrealised loss on strategic investments, a paper loss on investments it still holds rather than cash that left the business.
What is advanced packaging?
Advanced packaging is the step where finished chips are stacked and connected together so they work as one unit. It is essential for high-bandwidth memory and AI chips, and Applied says its advanced packaging revenue is up about 90% in calendar 2026.
Why did the stock fall before the results?
Shares fell 3.58% to $380.95 in Thursday's regular session ahead of the after-close print, giving back part of Wednesday's 6.05% rise to $395.08. The print still missed one unofficial number: Earnings Whispers notes it beat the $4.06 consensus but came in below its $4.20 whisper number.
What should investors watch next?
Whether Applied hits its fiscal Q1 2027 guide of $11.1 billion in revenue, plus or minus $500 million, and whether cleanroom availability — the ready-to-use factory space that limits how fast equipment can be installed — really does cap 2027 equipment growth, as management says. The 2027 wafer fab equipment call of more than 30% growth is the number the whole equipment sector will be judged against.
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Source: VoltGrid News