Applied Materials, the U.S. semiconductor equipment maker, reported results for its fiscal fourth quarter of 2026, which ended October 25, on November 12, 2026. Revenue rose 53% year over year to $10.409 billion, driven by growth in both its semiconductor systems business and its services and parts business. The company forecast revenue of $11.1 billion for the next quarter and said it is expanding capacity so it can double equipment output from the latest quarter's level by 2028. However, the next-quarter forecast covers 14 weeks, one week longer than usual, and the planned capacity expansion does not mean revenue will double. Turning strong demand into actual equipment shipments will require a broader component supply chain and customers' fabs to be ready.
Revenue of $10.409 billion and sharply improved margins
Fourth-quarter revenue rose 53% from $6.8 billion a year earlier. Full-year fiscal 2026 revenue came to $34.446 billion, up 21% from the previous year. Net income under U.S. generally accepted accounting principles (GAAP) was $2.718 billion, and diluted earnings per share (EPS) were $3.40, both up 43% from a year earlier. Non-GAAP EPS, which adjusts for items such as acquisitions, restructuring, investment gains and losses, and tax-related items, was $4.16, up 92% year over year.
Profitability also improved. GAAP gross margin rose from 48.0% a year earlier to 50.4%, and non-GAAP gross margin rose from 48.1% to 50.6%. Non-GAAP operating margin improved sharply, from 28.6% to 35.3%. Chief Financial Officer Brice Hill said an improved product mix and higher selling prices lifted adjusted gross margin. Adjusted operating expenses fell 4.3 percentage points as a share of revenue to 15.2%, as revenue growth outpaced cost increases.
By segment, the core semiconductor systems business grew about 64% year over year to $7.996 billion. By end market, that segment's revenue was 58% foundry and logic, 33% DRAM, and 9% flash memory. The DRAM share rose from 28% a year earlier to 33%, indicating that growing memory-related investment is lifting sales.
Meanwhile, revenue at Applied Global Services (AGS), which handles maintenance services and replacement parts, rose about 26% year over year to $1.896 billion, with services and replacement parts revenue setting a record. For calendar 2026, the company expects semiconductor equipment revenue to grow more than 40% and advanced packaging-related revenue to grow about 90%. Note that this calendar 2026 outlook roughly covers the second quarter of fiscal 2026 through the first quarter of fiscal 2027, so its measurement period differs from the full-year fiscal 2026 results announced this time.
Next-quarter revenue forecast at $11.1 billion, but over 14 weeks
For the first quarter of fiscal 2027, Applied Materials forecasts revenue of $11.1 billion, plus or minus $500 million. Its non-GAAP diluted EPS forecast is $4.35, plus or minus $0.20. The midpoints imply year-over-year growth of 58% in revenue and 83% in EPS. The revenue forecast exceeds the market expectation of $10.89 billion that Reuters reported, citing LSEG data.
However, the coming quarter consists of 14 weeks rather than the usual 13. The company said the extra week will contribute to AGS revenue growth but did not disclose how much it will add to total revenue. That makes it difficult to judge how much demand is actually increasing from a simple comparison of quarterly revenue.
By segment, the company expects next-quarter revenue of about $8.7 billion from semiconductor systems, about $2 billion from AGS for the first time, and about $400 million from other businesses. It also expects AGS revenue in the second quarter of fiscal 2027 to remain close to first-quarter levels. Attention will focus on whether the services business can sustain its growth once the boost from the extra week is gone.
Based on the earnings release and the earnings call prepared remarks, the revenue results, next-quarter forecast, and capacity expansion plan can be summarized as follows. The figures cover different periods and metrics, so actual results, forecasts, and capital investment targets should be viewed separately. Revenue figures have been converted from the millions of dollars stated in the earnings release into billions.
| Period | Figure / scope | Category | Key conditions |
|---|---|---|---|
| Fiscal Q4 2026 | Revenue of $10.409 billion | Actual | Quarter ended October 25, 2026 |
| Fiscal Q1 2027 | Revenue of $11.1 billion | Company forecast midpoint | 14 weeks, range of plus or minus $500 million |
| By 2028 | Capacity to double equipment output | Capital investment target | Baseline is fiscal Q4 2026 output |
In particular, the capacity expansion through 2028 is a goal of putting in place the ability to double equipment output; it is not a forecast that actual output or revenue will necessarily double.
Component supply and customers' cleanrooms are key to boosting output
Chief Executive Officer Gary Dickerson expects industry-wide demand for wafer fabrication equipment in 2027 to grow more than 30% from the previous year. However, he indicated that actual market growth will depend on the supply capacity for equipment components and raw materials, as well as how far customers advance with fab construction and production line preparation. To run semiconductor manufacturing equipment, customers must secure cleanrooms with tightly controlled dust and particulates and complete equipment installation and startup. According to the company, expanding the component supply chain is the near-term challenge for increasing output, while the readiness of customers' cleanrooms could constrain equipment deployment in the medium term.
Applied Materials is tracking more than 20 new fab startups and production line expansions planned for 2027. Many of the newly identified projects are scheduled to begin operating in 2029–2030. Major customers provide demand forecasts covering the next eight quarters, updated each quarter, and orders are also being pulled forward. Based on this long-term demand outlook, the company is expanding its production facilities and component procurement setup.
On boosting supply capacity, CFO Hill said, "We are investing so that we can double equipment output by 2028 from the fiscal fourth quarter of 2026 level." The company also outlined plans to more than double its manufacturing and research facility capacity by 2030. With equipment demand surging, it intends to pursue near-term output increases in parallel with medium- to long-term capital investment aimed at customer fabs coming online from 2029 onward.
In judging future growth, progress on three fronts will matter: expansion of the component supply chain, Applied Materials' own capacity build-out, and customers' fab startups. If any one of them lags, equipment shipments and revenue recognition could be pushed back even if demand is strong. In the latest results, a key point to watch is whether AGS revenue can stay at a high level after the 14-week first quarter ends. Whether the 2027 semiconductor equipment market expands as the company expects will depend on how far these supply-side and customer-side constraints can be resolved.