Applied Materials’ second quarter saw revenue and non-GAAP profitability exceed Wall Street expectations, but the market responded negatively despite the company’s strong headline growth. Management attributed the outperformance to robust demand for semiconductor manufacturing equipment, especially in leading-edge logic and DRAM for artificial intelligence (AI) infrastructure. CEO Gary Dickerson highlighted, “Customers have found new ways to address clean room space constraints and significantly increase their demand for tool deliveries.” The quarter also benefited from expanded services and strong execution in advanced packaging technologies.
Is now the time to buy AMAT? Find out in our full research report (it’s free for active Edge members).
Applied Materials (AMAT) Q2 CY2026 Highlights:
- Revenue: $9.12 billion vs analyst estimates of $9.04 billion (24.8% year-on-year growth, 0.9% beat)
- Adjusted EPS: $3.50 vs analyst estimates of $3.39 (3.1% beat)
- Adjusted Operating Income: $3.10 billion vs analyst estimates of $3.03 billion (34% margin, 2.3% beat)
- Revenue Guidance for Q3 CY2026 is $10.25 billion at the midpoint, above analyst estimates of $9.66 billion
- Adjusted EPS guidance for Q3 CY2026 is $4.02 at the midpoint, above analyst estimates of $3.69
- Operating Margin: 33.7%, up from 30.6% in the same quarter last year
- Inventory Days Outstanding: 132, down from 146 in the previous quarter
- Market Capitalization: $393.9 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Applied Materials’s Q2 Earnings Call
- C. J. Muse (Cantor Fitzgerald) asked about the updated growth outlook for semiconductor systems. CFO Brice Hill said demand has strengthened beyond prior 30% growth expectations, with ongoing customer CapEx increases and strong multi-year demand signals.
- Stacy Rasgon (Bernstein Research) questioned why gross margins are guided flat despite higher revenue. Hill explained near-term ramp costs for new hires and service engineers, as well as business mix changes, are offsetting margin gains, but expects improvement over time.
- Vivek Arya (Bank of America Securities) asked how long-term customer agreements translate into Applied’s visibility. Hill said the company now gets detailed eight-quarter forecasts and multi-year technology roadmaps, enabling improved planning and supply chain alignment.
- Krish Sankar (TD Cowen) inquired if increased scheduling visibility allows for more pricing flexibility or adds cost pressures. Hill noted that stronger customer collaboration improves planning and reduces uncertainty, but also requires investment in capacity and supply chain readiness.
- Harlan Sur (JPMorgan) asked about growth and margin potential in the services segment. Hill said AI-enabled solutions and a growing installed base are driving higher margins and sees continued improvement as service innovation expands.
Catalysts in Upcoming Quarters
Going forward, the StockStory team will track (1) the pace of adoption for new advanced packaging and DRAM solutions, (2) execution on manufacturing and supply chain expansion to meet demand, and (3) sustained growth in the services segment as AI-driven monitoring and analytics scale. Progress in panel-level packaging and further customer commitments will also be key indicators for Applied’s ability to capitalize on AI-driven semiconductor demand.
Applied Materials currently trades at $500.50, down from $534.54 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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