Applied Materials, Inc.

Q3 fiscal 2026 revenue was a record $9.1 billion, up 15% sequentially and 25% year over year. Non-GAAP gross margin was 50.4%, up 40 basis points sequentially and 150 basis points year over year; non-GAAP operating margin was a record 34%, up 190 basis points sequentially and 330 basis points year over year; and non-GAAP EPS was a record $3.50, up 22% sequentially and 41% year over year. Semiconductor Systems revenue was a record $7.0 billion, up 18% sequentially and 27% year over year, while Applied Global Services revenue was a record $1.8 billion, up 22% year over year. For Q4, the company guided to revenue of $10.25 billion, plus or minus $500 million, and non-GAAP EPS of $4.02, plus or minus $0.20. Q4 non-GAAP gross margin is expected to be about 50.4%, with non-GAAP operating expenses around $1.58 billion. Within Q4 guidance, Semiconductor Systems revenue is expected to be around $7.9 billion, AGS around $1.84 billion, and other revenue around $510 million. Brice Hill also said other revenue should average about $400 million per quarter through 2027.

Gary Dickerson framed AI as a multi-year demand engine that is reshaping the semiconductor industry and increasing the value of Applied’s technology. He emphasized two concurrent races: technology leadership and capacity, with Applied positioned in the most valuable segments—leading-edge logic, DRAM, and advanced packaging. His tone was highly confident, repeatedly citing stronger customer pull, deeper visibility, and expectations for continued strong growth in 2027 and beyond.

Brice Hill highlighted another quarter of double-digit sequential and year-over-year growth in revenue, operating profit, and non-GAAP EPS, along with 13 straight quarters of gross margin expansion. He said gross margin benefits from value-based pricing, portfolio strength, and cost control, while also noting near-term ramp costs from hiring and training, which kept Q4 gross margin guidance roughly flat at 50.4%. On cash, he said operating cash flow was over $3 billion, capex was $707 million, free cash flow was $2.3 billion, and $860 million was returned to shareholders through $420 million of dividends and $440 million of buybacks; he also noted $12.8 billion remains under authorization and the company expects to return 80%-100% of free cash flow.

Analysts focused on how strong the systems growth outlook could be into calendar 2027, and management said the outlook is now stronger than the >30% framework given last quarter, though they would not quantify Q1 or full-year 2027 yet. Questions also pressed on gross margin durability and why Q4 margins were guided flat despite revenue growth; Hill pointed to ramp costs, display mix, and the ongoing hiring of manufacturing and support staff, while saying margin improvement should continue over the longer term. The call also covered visibility extending beyond 8 quarters, with management saying they can see about 5 years of roadmap visibility for large customers and that some conversations now extend to 2030, but that the capacity buildout is not a revenue forecast.