Applied Materials (AMAT) investor relations material

Executive summary

• Achieved record quarterly revenue and earnings, with the highest gross margin in over 25 years, driven by accelerating AI adoption, strong demand in foundry logic, DRAM, and advanced packaging, and operational execution.

• Leadership in process equipment for leading-edge foundry logic, DRAM, and advanced packaging, with #1 supplier position in all three markets.

• Announced new products, acquisitions, and partnerships to strengthen technology leadership, including Trillium ALD, Precision PECVD, and intent to acquire NEXX.

• EPIC Center and co-innovation platform launched, gaining momentum with major industry and academic partners to accelerate technology commercialization.

• Over 35,000 internal AI users optimizing operations and new collaborations with TSMC, SK hynix, Micron, Advantest, and universities.

Financial highlights

• Q2/FQ2'26 revenue reached $7.91 billion, up 13% sequentially and 11% year-over-year.

• Non-GAAP gross margin was 50%, up 80 basis points year-over-year; non-GAAP operating margin at 32.1%.

• Record non-GAAP EPS of $2.86, up 20% year-over-year; GAAP EPS reached $3.51, up 33% year-over-year.

• Semiconductor Systems revenue was $5.97 billion, up 16% sequentially and 10% year-over-year; AGS revenue was $1.67 billion, up 17% year-over-year.

• Free cash flow was $210 million; $765 million returned to shareholders via dividends and buybacks.

Outlook and guidance

• Q3 revenue guidance: $8.95 billion ±$500 million; non-GAAP EPS: $3.36 ±$0.20; non-GAAP gross margin expected at 50.1%.

• Semiconductor equipment business expected to grow over 30% in 2026, with strong growth anticipated into 2027 and beyond.

• AGS annual growth rate outlook raised to mid-teens, with higher growth expected this year.

• Customers providing longer-term demand visibility, with expectations for another record year in 2027.