TLDR
- AMAT hits record annual revenue and EPS even as the stock slips on mixed signals.
- Semiconductor Systems drives growth, though margins soften on product mix shifts.
- Quarterly results show resilient income despite revenue dips and cost pressures.
- Display unit surges with sharp profit gains from advanced screen technologies.
- Fiscal 2026 outlook signals steady demand and confidence in long-term execution.
Applied Materials (AMAT) share price closed lower at $223.23, marking a 3.25% drop despite reporting record annual results.
Applied Materials, Inc., AMAT
The company posted annual revenue of $28.37 billion, up 4% year over year, supported by gains in advanced semiconductor demand. Moreover, AMAT achieved record GAAP EPS of $8.66 and non-GAAP EPS of $9.42, reflecting 1% and 9% growth respectively.
Record Annual Results Support Long-Term Strength
AMAT reported fourth-quarter revenue of $6.80 billion, representing a 3% decline compared with the same period last year. However, GAAP EPS rose 14% to $2.38, while non-GAAP EPS declined 6% to $2.17 due to segmental pressure. Gross margin improved slightly to 48.0%, showing operational stability amid a mixed market environment.
Operating margin stood at 25.2%, lower by 3.8 points from the previous year as operating income faced cost pressures. Yet, net income increased 10% to $1.90 billion, underlining resilience in core operations. In contrast, non-GAAP net income fell 10% to $1.73 billion as demand moderation affected near-term profitability.
AMAT also generated non-GAAP free cash flow of $2.04 billion in the quarter, reflecting a 6% decline year over year. The company maintained strong liquidity to fund R&D and capital expansion. The quarter’s results showed the firm’s disciplined cost management and consistent revenue execution.
Annual Growth and Segment Performance
Across fiscal 2025, AMAT achieved consistent growth across its major business segments. Semiconductor Systems delivered $20.8 billion in revenue, rising 4% annually, supported by strength in foundry, logic and DRAM markets. Operating margin for this unit dropped to 32.1% as product mix changes weighed on profitability.
Applied Global Services contributed $6.39 billion in revenue, slightly up from $6.23 billion a year ago. Operating margin remained steady at 28.1%, highlighting continued service strength and aftermarket demand. Corporate and Other segments posted $1.19 billion in revenue, driven by higher display-related income.
Display operations generated $355 million in quarterly revenue, with operating income climbing sharply to $91 million from $5 million a year earlier. The improvement reflected rising adoption of advanced display technologies. AMAT maintained leadership in wafer fabrication equipment and materials engineering solutions.
Outlook and Strategic Position
For the first quarter of fiscal 2026, AMAT expects total revenue of about $6.85 billion, plus or minus $500 million. Non-GAAP diluted EPS is projected at $2.18, with a possible range of $0.20. This forecast indicates stable near-term demand and confidence in operational visibility.
The company plans to align operations and services to meet higher demand expected in the second half of calendar 2026. Its strategic focus remains on enhancing transistor efficiency and enabling faster chip performance. AMAT continues to target sustainable growth through innovation and disciplined execution in the global semiconductor market.
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