TLDR
- Applied Materials (AMAT) shares rallied 13% in after-hours trading Thursday after the company reported first-quarter results that exceeded expectations.
- The semiconductor equipment maker posted adjusted EPS of $2.38 on $7.01 billion revenue versus analyst estimates of $2.21 and $6.87 billion.
- CEO Gary Dickerson anticipates semiconductor business expansion of more than 20% in 2026 driven by AI infrastructure investments.
- Second-quarter guidance calls for $7.15-$8.15 billion revenue and $2.44-$2.84 adjusted EPS, beating Street estimates of $7.01 billion and $2.28.
- The company’s quarterly profit rose 70% to $2.03 billion while shares have gained 78% over the trailing 12 months.
Applied Materials posted first-quarter earnings Thursday that crushed Wall Street expectations and pushed shares higher in extended trading. The semiconductor equipment manufacturer reported adjusted earnings of $2.38 per share on $7.01 billion in revenue.
Analysts polled by FactSet had forecast $2.21 per share on $6.87 billion revenue. The results represent another strong quarter for chipmaking equipment companies benefiting from AI expansion.
Quarterly profit climbed 70% to $2.03 billion from $1.19 billion in the same period last year. Shares rose 13% to $373 in after-hours trading.
Through Thursday’s regular session, the stock had advanced 78% over the past year.
Semiconductor Growth Accelerates
CEO Gary Dickerson outlined strong expansion plans during Thursday’s earnings call. He projects the semiconductor business will grow over 20% this calendar year.
“The race to build out AI infrastructure is driving unprecedented spending on semiconductors, semiconductor manufacturing capacity and research and development,” Dickerson told analysts.
The executive updated his timeline for global semiconductor industry revenues reaching $1 trillion. He now expects that target in 2026, accelerating from his prior 2027 forecast.
Higher-performing and more energy-efficient chips required by AI developers are driving growth in memory and packaging, Dickerson explained.
Forward Guidance Beats Estimates
Applied Materials issued second-quarter guidance that topped analyst projections. The company expects revenue of $7.15 billion to $8.15 billion with adjusted earnings between $2.44 and $2.84 per share.
Wall Street had anticipated $7.01 billion revenue and $2.28 per share adjusted earnings. The forecast beats consensus on both the top and bottom lines.
CFO Brice Hill said Applied Materials has nearly doubled system manufacturing capability. The company also boosted inventories to meet growing demand from customers.
Key customers are offering extended visibility into their requirements. They want Applied Materials to have adequate operational capacity and service support for their production increases, according to Dickerson.
Equipment Sector Sees Tailwinds
KeyBanc analyst Steve Barger upgraded his Applied Materials price target to $450 from $380. He kept an Overweight rating on shares.
Barger views AI as a “long-duration growth catalyst” that provides extended demand visibility for the chipmaking equipment sector.
The positive results align with optimistic outlooks from peers ASML Holding and Lam Research. The chip equipment industry is experiencing strong momentum from AI-related semiconductor production.
Dickerson said demand will likely tilt toward the second half of 2026. Applied Materials has positioned itself to capture that growth through expanded manufacturing capacity and higher inventory levels to support customer ramps.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
