Applied Materials jumps after posting better-than-expected Q1 results, strong Q2 outlook
The semicap company just reported its Q1 results.
Applied Materials is surging in postmarket trading after posting better-than-expected Q1 results along with a robust Q2 outlook.
For its fiscal Q1, the semicap company reported:
Net revenue of $7.01 billion (estimate: $6.86 billion, guidance for $6.35 billion to $7.35 billion).
Adjusted earnings per share of $2.38 (estimate: $2.21, guidance for $1.98 to $2.38).
Profitability was also a strong point, as adjusted gross margins came in at 49.1% for the quarter, north of estimates and guidance for 48.4%.
For Q2, management expects:
Net revenue of $7.65 billion, plus or minus $500 million (estimate: $7.03 billion).
Adjusted EPS of $2.64, plus or minus $0.20 (estimate: $2.29).
This robust near-term guidance is particularly encouraging, as the company reiterated that it sees demand picking up toward the second half of the year.
“The need for higher performance and more energy-efficient chips is driving high growth rates for leading-edge logic, high-bandwidth memory [HBM] and advanced packaging,” President and CEO Gary Dickerson said in a press release. He also said the company expects to grow its semiconductor equipment business by over 20% this calendar year.
“Our largest customers are giving us increased longer term visibility to ensure we have operational capacity and service support in place for their ramps,” he added during the conference call. “Based on this visibility, we expect strong growth momentum to be carried into 2027.”
The company said that HBM and 3D chiplet stacking, two areas where AMAT has strong market share, will be the fastest-growing industry segments this year.
The longevity and magnitude of the AI boom has fueled a sharp rise in Applied Materials so far in 2026, as an enduring supply/demand imbalance pushes chipmakers to boost capacity, bolstering the outlook for wafer fab equipment sales.
CFO Brice Hill said the company was “well-positioned to meet the increasing demand” because “we’ve proactively increased our inventory by nearly $500 million year-over-year to meet the increasing build plans.”
All this has more than offset any lingering worries about the state of its China business after management warned in early October that export restrictions would curb sales by roughly $600 million this fiscal year.
Late on Wednesday, the company reached an agreement that will see it pay $252.5 million to settle a Commerce Department probe into allegations that some of its business with China ran afoul of export restrictions.
