Applied Materials Q2 Earnings Beat Estimates, Revenues Increase Y/Y

Applied Materials AMAT reported second-quarter fiscal 2026 non-GAAP earnings of $2.86 per share, which beat the Zacks Consensus Estimate by 6.5%. AMAT’s second-quarter fiscal 2026 non-GAAP earnings increased 19.7% from the year-ago quarter’s reported figure of $2.39 per share.AMAT beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 7.1%.AMAT reported revenues of $7.91 billion in second-quarter fiscal 2026, surpassing the consensus estimate by 2.8%. This top line increased 11.4% from the year-ago quarter’s reported figure of $7.1 billion.AMAT Delivers Record Quarter as AI Build-Out AcceleratesManagement tied the quarter’s strength to the rapid global build-out of AI computing infrastructure and Applied Materials’ leadership in leading-edge foundry-logic, DRAM and advanced packaging. The company also highlighted rising customer visibility, including rolling eight-quarter forecasts from its largest customers, supporting planning for capacity and service resources.Applied Materials, Inc. Price, Consensus and EPS Surprise Applied Materials, Inc. price-consensus-eps-surprise-chart | Applied Materials, Inc. QuoteApplied Materials emphasized that AI demand is expanding beyond training and inference into agentic applications, which it said are more CPU-intensive and can raise demand for DRAM and NAND. The company also noted broad internal AI adoption, with more than 35,000 users across its global workforce.Applied Materials Sees EPIC Platform Deepening PartnershipsApplied Materials pointed to momentum in its EPIC platform, designed to shorten commercialization cycles from research to full-scale manufacturing. During the quarter, it announced multiple partner engagements, including TSMC joining as a founding partner alongside Micron, Samsung and SK hynix, with Advantest as an innovation partner and ASU, RPI and Stanford as research partners.The company said the EPIC Center in Silicon Valley remains on track to begin operations in the fall. Applied Materials framed this collaboration model as a way to improve R&D productivity, increase multi-node visibility for investment decisions and accelerate design wins for its tools and services.AMAT Segment Mix Reflects Strength in Core MarketsSegment performance was led by Semiconductor Systems, which generated $5.97 billion in revenues in the quarter, up 10% from $5.40 billion reported a year earlier. Applied Global Services posted $1.67 billion in revenues, up 17% from the $1.42 billion reported in the prior-year quarter, while Other revenues were $280 million compared with $279 million a year ago.Within Semiconductor Systems, the company cited record foundry revenues and strength across ALD, epitaxy and materials treatments, alongside DRAM revenue growth and an acceleration in advanced packaging tied to 3D stacking investments. Management also noted that China represented 24% of Semiconductor Systems plus AGS revenues.Applied Materials Expands Operating Leverage and ProfitabilityOn a non-GAAP basis, Applied Materials reported a gross margin of 50%. On a non-GAAP basis, operating income was $2.54 billion, translating to a 32.1% operating margin. Management attributed margin expansion to value-based pricing on differentiated products and ongoing manufacturing cost improvements, while also emphasizing continued investment in R&D and operational readiness to support customer growth.AMAT’s Balance Sheet and Cash FlowAs of April 26, 2026, cash and cash equivalents plus short-term investments were $8.24 billion compared with $8.51 billion at the end of the previous quarter. Long-term debt was $5.26 billion at the end of second-quarter fiscal 2026, down from $6.46 billion at the end of fiscal 2025.Applied Materials generated $845 million of cash from operations in the quarter and reported non-GAAP free cash flow of $210 million.Shareholder returns totaled $765 million, including $400 million in share repurchases and $365 million in dividends. The company also noted $13.2 billion remaining under its share repurchase authorization at quarter-end.Applied Materials Guides Higher Q3 Revenues and EarningsFor the third quarter of fiscal 2026, Applied Materials expects total revenues of $8.95 billion plus or minus $500 million. The Zacks Consensus Estimate for revenues is pegged at $8.28 billion, indicating year-over-year increase of 13%.Applied Materials expects non-GAAP earnings of $3.36 per share plus or minus 20 cents. The Zacks Consensus Estimate for third-quarter fiscal 2026 earnings is pegged at $2.94, indicating year-over-year increase of 18.6%.Within that outlook, Semiconductor Systems revenues are projected at about $6.90 billion, Applied Global Services at about $1.75 billion and Other at about $300 million.The company expects non-GAAP gross margin of about 50.1%, non-GAAP operating expenses of roughly $1.49 billion and a non-GAAP tax rate near 11%.Management said demand indicators have strengthened and reiterated expectations for continued growth into 2027 based on customer signals and expanding cleanroom capacity initiatives.Zacks Rank and Other Stocks to ConsiderCurrently, AMAT carries a Zacks Rank #2 (Buy).Some other top-ranked stocks in the broader Zacks Computer and Technology sector are Broadcom AVGO, Celestica CLS and Samsara IOT, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Shares of Broadcom have gained 21.7% year to date. The Zacks Consensus Estimate for Broadcom’s 2026 earnings is pegged at $11.45 per share, up by a penny over the past 30 days, indicating an increase of 68% year over year.Shares of Celestica have rallied 41.7% year to date. The consensus estimate for Celestica’s 2026 earnings is pegged at $9.85 per share, up $1.01 over the past seven days, indicating an increase of 62.8% year over year.Samsara shares have lost 14% year to date. The Zacks Consensus Estimate for IOT’s fiscal 2027 earnings is pegged at 68 cents per share, up 11 cents over the past 60 days, indicating an increase of 21.4% year over year.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.See Stocks Now >>This article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks