First-Quarter Revenue Outlook Exceeds Expectations at Applied Materials Amid Continued AI Chip Expansion!

At $10.41 billion, Applied Materials’ fourth-quarter revenue exceeded expectations. The figure represented growth of approximately 53% year on year, against a market forecast of around $10.3 billion. Published after Thursday’s market close, the results covered the fourth quarter and full fiscal year 2026. An approximately 92% increase brought adjusted earnings per share to $4.16, beating the $4.06 forecast. The core Semiconductor Systems business contributed $8 billion in quarterly revenue, a 64% year-on-year increase driven by the expansion of AI chip production capacity.

Strong demand for advanced AI chips formed the basis of the company’s first-quarter fiscal 2027 revenue guidance, which exceeded Wall Street expectations. Applied Materials is counting on that demand to sustain expenditure on semiconductor manufacturing equipment. According to the CEO, fiscal 2026 produced record results. Continued additional semiconductor demand from AI leaves the Semiconductor Systems business on course to grow more than 40% over calendar 2026.

Record annual revenue of $34.45 billion represented growth of 21%. Records were also achieved in GAAP earnings per share of $12.62 and non-GAAP earnings per share of $12.89, with the latter increasing 37%. Cash generated from operations amounted to $8.87 billion. Of the $4.75 billion returned to shareholders, share repurchases accounted for $3.18 billion and dividends for $1.57 billion.

Applied Materials’ revenue guidance for the first quarter of fiscal 2027 stands at approximately $11.1 billion, plus or minus $500 million. That compares with an average analyst estimate of around $10.89 billion. Guidance for adjusted earnings per share likewise exceeds expectations: approximately $4.35, plus or minus $0.20. The company anticipates that sustained, strong demand for advanced AI chips will keep supporting investment in semiconductor manufacturing equipment. After-hours trading saw the shares rise approximately 3%.

AI tools are central to the revenue-doubling plans outlined by the CEO in late October. Over the next few years, the company aims to double revenue without a proportional increase in headcount, mainly through AI-led efficiency gains in research and development and quality control. Its $5 billion EPIC research and development centre in Silicon Valley is also being brought into operation to shorten next-generation chip development times. Policy uncertainty remains greatest in the Chinese market, however. Following expanded US export restrictions on China, Applied Materials had previously projected a fiscal 2026 revenue loss of approximately $600 million.

Management’s demand commentary highlighted persistent capacity constraints for leading-edge logic chips and DRAM. It also described advanced packaging demand as still very strong, with high-bandwidth memory and hybrid bonding particularly prominent.

80% Hybrid Bonding Process Coverage: Market Insight

Approximately 80% of hybrid bonding process steps are covered by Applied Materials’ equipment. The company maintains an optimistic view of demand for new packaging architectures. With dividend increases extending across nine consecutive years and a current yield of 0.54%, its dividend record reflects management’s confidence in continued cash generation.