Applied Materials reported a record FY2026 third quarter, beating consensus on both revenue and adjusted earnings, with semiconductor systems accounting for most of the growth. The company also issued fourth-quarter guidance well above market expectations and said the faster global adoption of AI remains a core demand driver.
Revenue and adjusted EPS topped expectations
For FY2026 Q3, Applied Materials posted revenue of $9.115 billion, up 25% from a year earlier and above the roughly $9.020 billion consensus estimate. Management said the quarter delivered the highest sequential revenue increase in the company’s history.
Adjusted EPS came in at $3.50, up 41% year over year and ahead of the $3.42 consensus estimate. GAAP diluted EPS was $3.17.
Semiconductor systems remained the main growth engine
By segment, semiconductor systems generated $7.04 billion in revenue, up 26.5% year over year. Applied Global Services, or AGS, contributed $1.781 billion, up 21.7%, while other businesses brought in $294 million, up 6.9%. Together, the three segments matched total revenue.
Within semiconductor systems, foundry and logic accounted for 67% of revenue, DRAM represented 26%, and flash made up 7%.
Gross margin expanded for a 13th straight quarter
GAAP gross margin was 50.3% in the quarter, while non-GAAP gross margin reached 50.4%. The company said this marked its 13th consecutive quarter of year-over-year gross margin expansion.
Q4 guidance came in above consensus
Applied Materials guided fourth-quarter revenue to a range of $9.75 billion to $10.75 billion. The midpoint, $10.25 billion, was above the roughly $9.62 billion consensus estimate.
Adjusted EPS guidance was set at $3.82 to $4.22, with a midpoint of $4.02, also above the roughly $3.72 consensus forecast.
The company said it raised its 2026 revenue outlook for the semiconductor systems business, expects full-year growth to outpace the broader market, and sees 2027 as another year of strong growth.
Product launches and capacity expansion moved ahead together
During the quarter, Applied Materials introduced six new process systems aimed at DRAM and advanced packaging, along with new deposition and etch tools.
On capacity, the company said its $500 million Tampines campus in Singapore increased advanced cleanroom capacity by more than two times. Its EPIC center also added three new partners: Broadcom, the University of California, Berkeley, and SCREEN Semiconductor Solutions.
MSX View
According to MSX View, the earnings report showed a clear growth structure: nearly all of the revenue increase came from semiconductor systems, and within that segment, foundry and logic together with DRAM made up the bulk of the mix, pointing to demand tied to AI computing for advanced logic and high-bandwidth memory.
MSX View also said the quality of earnings stood out. It noted that 13 straight quarters of gross margin expansion suggested the company was not relying on price concessions to drive volume, but was instead seeing gains from equipment mix and customer yield value at the same time.
The note added that the midpoint of Q4 revenue guidance was about 6.5% above consensus, while the midpoint of adjusted EPS guidance was about 8% higher. Combined with the higher full-year semiconductor systems outlook and early capacity planning for demand later this decade, MSX View said management was signaling a longer-cycle view. It identified the pace of growth in DRAM and advanced packaging, and the effect of aggressive capacity expansion on margins if demand cycles fluctuate, as the main areas to watch.
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