--- title: "AI Demand Pushes Applied Materials To Highest Margins In 25 Years" type: "News" locale: "en" url: "https://longbridge.com/en/news/286548355.md" description: "Applied Materials (AMAT) reported strong Q2 results with revenue of $7.91 billion, driven by AI demand, and raised its Q3 guidance to $8.95 billion. Despite a 150% stock increase over the past year, shares fell 2.82% in premarket trading. The company achieved a gross margin of 50%, its highest in 25 years, and expects significant growth in advanced packaging and semiconductor equipment due to AI investments." datetime: "2026-05-15T10:01:52.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/286548355.md) - [en](https://longbridge.com/en/news/286548355.md) - [zh-HK](https://longbridge.com/zh-HK/news/286548355.md) --- # AI Demand Pushes Applied Materials To Highest Margins In 25 Years **Applied Materials, Inc.** (NASDAQ:AMAT) shares fell in premarket trading Friday after the chip equipment maker issued strong third-quarter guidance despite reporting better-than-expected second-quarter results driven by AI-related semiconductor demand. Applied Materials shares have gained more than 150% over the past year and were trading near their 52-week high of $448.45 ahead of the earnings release, reflecting elevated investor expectations. Following the announcement of second-quarter results, some investors appeared to engage in profit-taking activity, contributing to the stock's decline despite the company reporting strong financial performance. ## Strong Q2 Results Beat Expectations The company reported second-quarter revenue of $7.91 billion, up 11% from a year earlier and above analyst estimates of $7.65 billion. Adjusted earnings came in at $2.86 per share, topping Wall Street expectations of $2.66 per share. ## AI Demand Drives Semiconductor Growth Applied Materials said growth was fueled by demand for leading-edge foundry logic, DRAM memory and advanced packaging technologies tied to artificial intelligence infrastructure. Gross margin expanded to 50%, marking its highest level in more than 25 years, supported by pricing strength, differentiated products and manufacturing efficiencies. ## Segment Performance Shows Broad-Based Strength Semiconductor Systems revenue rose 10% year over year to $5.97 billion. DRAM revenue increased 18% to $1.7 billion as AI workloads continued to boost memory demand. Applied Global Services revenue climbed 17% to $1.67 billion, helped by higher fab utilization and expanded advanced service offerings. ## EPIC Center Expands Industry Partnerships The company also announced the launch of its EPIC Center, aimed at accelerating co-innovation efforts with partners including **Taiwan Semiconductor Manufacturing Company Ltd.** (NYSE:TSM), **Micron Technology, Inc.** (NASDAQ:MU), **Samsung Electronics Co. Ltd.** (OTC:SSNLF) and **SK Hynix**. ## Advanced Packaging Outlook Remains Strong Applied Materials said its advanced packaging business is expected to grow more than 50% in 2026, supported by adoption of chiplet architectures and high-bandwidth memory technology for AI chips. The company added that acquisitions such as NEXT are expected to strengthen its panel-level packaging capabilities. Management said leading-edge logic, DRAM and advanced packaging are expected to account for more than 80% of wafer fab equipment growth in 2026 and 2027, areas where the company believes it is well positioned. ## Manufacturing Expansion Supports AI Investment Cycle To support future demand, Applied Materials said it is expanding manufacturing capacity across the U.S., Europe and Singapore, nearly doubling output capability as part of a broader multi-year AI-driven semiconductor investment cycle. ## Q3 Guidance Tops Wall Street Estimates For the third quarter, the company forecast revenue of $8.95 billion, plus or minus $500 million, above analyst estimates of $8.09 billion. Applied Materials also projected adjusted earnings of $3.16 to $3.56 per share, compared with Wall Street expectations of $2.88 per share. The company raised its outlook for semiconductor equipment growth this calendar year to more than 30%, up from prior guidance of 20%. It also expects semiconductor equipment revenue to grow more than 30% in 2026 as AI infrastructure spending and chip manufacturing investments continue to expand. ## Analyst Consensus & Recent Actions The stock carries a Buy rating with an average price forecast of $444.30. Recent analyst moves include: - **Citigroup**: Buy (Raises forecast to $520.00) (May 12) - **Cantor Fitzgerald**: Overweight (Raises forecast to $550.00) (May 11) - **HSBC**: Initiated with Buy (Forecast $517.00) (May 8) ## Stock Slides Despite Bullish Outlook **AMAT Price Action:** Applied Materials shares were down 2.82% at $428.15 during premarket trading on Friday. The stock is approaching its 52-week high of $448.45, according to Benzinga Pro data. _Image via Shutterstock_ ### Related Stocks - [AMAT.US](https://longbridge.com/en/quote/AMAT.US.md) - [ARKQ.US](https://longbridge.com/en/quote/ARKQ.US.md) - [ROBO.US](https://longbridge.com/en/quote/ROBO.US.md) - [BOTZ.US](https://longbridge.com/en/quote/BOTZ.US.md) - [XSD.US](https://longbridge.com/en/quote/XSD.US.md) - [IBOT.US](https://longbridge.com/en/quote/IBOT.US.md) - [SOXX.US](https://longbridge.com/en/quote/SOXX.US.md) ## Related News & Research - [Applied Materials Sees Multi-Year AI Boom Driving Record Revenue And Growth Through 2028](https://longbridge.com/en/news/286592782.md) - [AMAT Q2 goes past estimates to record high on AI-driven demand](https://longbridge.com/en/news/286460157.md) - [How High Can Applied Materials Stock (AMAT) Rise? 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