---
title: "Applied Materials Plunges! AI Wave Boosts Equipment Demand, But Earnings Beat Fails to Satisfy Market Appetite | Earnings Watch"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/295852978.md"
description: "Applied Materials reported Q3 revenue of $9.115 billion and net income of $2.538 billion, both exceeding expectations and hitting record highs. Despite Q4 guidance also surpassing market expectations, the market reaction was lukewarm due to the stock's significant year-to-date gains and high expectations for AI capital expenditure, with shares falling nearly 6% in after-hours trading. The CEO stated that AI adoption is driving strong equipment demand and raised long-term revenue forecasts"
datetime: "2026-08-13T21:59:09.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/295852978.md)
  - [en](https://longbridge.com/en/news/295852978.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/295852978.md)
---

# Applied Materials Plunges! AI Wave Boosts Equipment Demand, But Earnings Beat Fails to Satisfy Market Appetite | Earnings Watch

Applied Materials, one of the world's largest semiconductor equipment manufacturers, delivered strong third-quarter results and provided fourth-quarter guidance that exceeded market expectations. However, against the backdrop of a substantial stock price increase this year and already elevated market expectations for AI capital expenditure, this "earnings beat" failed to gain market approval.

**Applied Materials' third-quarter revenue reached $9.115 billion, higher than the expected $9 billion, representing a 25% year-over-year increase and setting a new historical record; GAAP net income was $2.538 billion, up 43% year-over-year, while adjusted earnings per share (EPS) came in at $3.50, beating the expected $3.42 and marking a 41% year-over-year increase, also a record.**

The company's gross margin continued to expand, with GAAP gross margin reaching 50.3%, an increase of 1.5 percentage points year-over-year, marking the 13th consecutive quarter of year-over-year improvement.

**The company expects fourth-quarter revenue of approximately $10.25 billion, about 7% higher than the average analyst expectation. Adjusted EPS is projected at $4.02, significantly above the market expectation of $3.72.**

**Despite both results and guidance surpassing average analyst expectations, Applied Materials' stock fell nearly 6% in after-hours trading. With the stock having more than doubled year-to-date, the market has set a higher bar for earnings beats.**

## **Earnings and Guidance Beat Expectations**

Applied Materials' management remains optimistic about future demand. The company expects fourth-quarter revenue of approximately $10.25 billion and adjusted EPS of $4.02, both higher than previous market expectations.

CEO Gary Dickerson stated that **as AI rapidly spreads globally, demand for materials engineering solutions has reached unprecedented levels**, leading the company to further raise its revenue forecast for the Semiconductor Systems segment for the 2026 calendar year, with expectations for continued strong growth in 2027.

CFO Brice Hill noted that revenue growth will remain strong in the second half of the year, particularly in DRAM, advanced process logic and foundry, and advanced packaging businesses.

The core logic behind this is that AI infrastructure construction continues to drive investment in advanced chip manufacturing. Applied Materials' equipment is widely used in the production of memory chips such as DRAM, which is a key component of High Bandwidth Memory (HBM), extensively utilized in AI accelerators from companies like Nvidia.

As demand for AI chips grows rapidly, memory chip manufacturers such as SK Hynix and Micron are accelerating the construction of new manufacturing facilities, thereby driving demand for semiconductor equipment.

**Dickerson stated that customers are even asking Applied Materials to increase capacity to obtain equipment faster; he expressed confidence in maintaining strong growth through 2027, based on cross-quarter demand forecasts provided by customers.**

## **DRAM and Advanced Packaging Become Growth Highlights**

From a business structure perspective, the Semiconductor Systems segment was the core driver of growth this quarter.

**Revenue for this segment in the third quarter was $7.04 billion, higher than $5.564 billion in the same period last year; Foundry, Logic, and other businesses accounted for 67%, DRAM for 26%, and Flash for 7%. The gross margin for the Semiconductor Systems segment reached 55.3%, an increase of 1.9 percentage points year-over-year, while operating margin rose from 33.0% to 37.7%.**

Applied Materials also launched six new systems targeted at DRAM and advanced packaging this quarter, including Centura Prime Epi for enhancing DRAM and HBM performance, Opta Quad CMP for hybrid bonding, and Nokota VMax 2 ECD for 3D stacking and advanced packaging of high-bandwidth memory.

The company simultaneously introduced new deposition and etch equipment to support the scaling of logic and memory chips for next-generation AI chips.

This indicates that equipment demand driven by AI is not just simply increasing fab capacity, but is extending to HBM, 3D stacking, advanced packaging, and more complex transistor structures. Applied Materials is attempting to capture more value in these new technology areas through materials engineering and equipment upgrades.

## **Market Hard to Satisfy After Significant Stock Price Surge**

Despite both results and guidance exceeding average analyst expectations, Applied Materials' stock fell about 6% in after-hours trading. This reflects not a sudden deterioration in fundamentals, but rather that investors have set a higher performance threshold for the company.

**Year-to-date, the market has viewed Applied Materials as a major beneficiary of the AI capital expenditure wave, leading to a significant surge in its stock price. In this context, a simple "earnings beat" is no longer sufficient to drive a strong stock price reaction; the market is now demanding higher growth rates and clearer realization of long-term demand.**

A similar situation previously occurred with competitor KLA. After KLA reported earnings, its results generally met expectations, but due to poor free cash flow performance, its stock also faced a lukewarm market reaction.

For Applied Materials, the key concern may no longer be whether AI demand exists, but whether the company can expand equipment capacity quickly enough to meet rising customer demand.

Dickerson stated that customers have been pushing the company to increase capacity, "they constantly ask us to add capacity." Meanwhile, some customers are seeking new cleanroom space and accelerating equipment delivery requests. The company stated that expanding manufacturing and R&D capabilities takes time, and it is currently increasing investment in manufacturing capacity to support expected demand lasting through the end of the century.

Therefore, the core signal from this earnings report is: **Investment in AI chip manufacturing remains strong, with demand for DRAM, HBM, and advanced packaging becoming new growth engines for Applied Materials; however, after the significant stock price increase, the market's expectations for this AI equipment leader have risen accordingly.**

Risk Warning and Disclaimer

The market carries risks; invest with caution. This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial status, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment decisions made based on this content are at the user's own risk.

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