AMAT raises 2026 growth forecast, expects to outgrow market
Applied Materials reported a blowout quarter and raised its already raised full-year outlook, citing unprecedented customer visibility and AI-driven demand across leading-edge logic, DRAM, and advanced packaging. Management's tone was exceptionally bullish, with plans to double manufacturing capacity by 2028. Key cross-company signals include a strong partnership with Broadcom on advanced packaging and a notably more positive view on China revenue. Raised full-year semi-systems growth forecast to 'greater than 30%' (from 'greater than 20%' last quarter) and now expects to outgrow WFE.
Вывод BuzzbergAMAT raises 2026 growth forecast, expects to outgrow marketApplied Materials reported a blowout quarter and raised its already raised full-year outlook, citing unprecedented customer visibility and AI-driven demand across leading-edge logic, DRAM, and advanced packaging. Management's tone was exceptionally bullish, with plans to double manufacturing capacity by 2028. Key cross-company signals include a strong partnership with Broadcom on advanced packaging and a notably more positive view on China revenue. Raised full-year semi-systems growth forecast to 'greater than 30%' (from 'greater than 20%' last quarter) and now expects to outgrow WFE.Читать полный анализСвернуть анализ
Applied Materials reported a blowout quarter and raised its already raised full-year outlook, citing unprecedented customer visibility and AI-driven demand across leading-edge logic, DRAM, and advanced packaging. Management's tone was exceptionally bullish, with plans to double manufacturing capacity by 2028. Key cross-company signals include a strong partnership with Broadcom on advanced packaging and a notably more positive view on China revenue. Raised full-year semi-systems growth forecast to 'greater than 30%' (from 'greater than 20%' last quarter) and now expects to outgrow WFE.
Guides FQ4 (Oct) revenue to $10.25B ± $500M, up 51% YoY, with EPS of $4.02.
Sees 'very significant increase' in DRAM revenue in H2, expects AGS to grow >20% in 2026, and PDC >50%.
Advanced packaging revenue is now expected to grow >70% in 2026, driven by HBM and 3D chiplet stacking.
AGS revenue$1.8B
+8% QoQ
OTHER revenue$0.294B
reported
SEMI_SYSTEMS revenue$7B
reported
Revenue$9.115B
+15% QoQ
Что изменилось в этом квартале
01
Guidance
AMAT raises 2026 growth forecast, expects to outgrow market
Guidance · revenue to $10.25B
02
Demand
Customer visibility extends to 2030, enabling long-term planning
Demand is accelerating, with record revenue and upward revisions to revenue growth forecasts for 2026. Customers are providing unprecedented visibility, including eight-quarter rolling forecasts and some conversations extending to 2030, and have announced more than 10 new fab…
03
AI
Advanced packaging revenues to grow over 70% in 2026
Management emphasized that AI is the biggest technology inflection and is driving unprecedented demand for advanced semiconductors, with customers making longer-term commitments. They highlighted AI-driven returns within their own operations, increasing revenue growth and…
04
Services
AGS growth forecast raised to over 20% for 2026
Sees 'very significant increase' in DRAM revenue in H2, expects AGS to grow >20% in 2026, and PDC >50%.
AI, капзатраты и спрос
AI
Платформа и монетизация
Management emphasized that AI is the biggest technology inflection and is driving unprecedented demand for advanced semiconductors, with customers making longer-term commitments. They highlighted AI-driven returns within their own operations, increasing revenue growth and operating margins, and noted that AI data center returns are tied to token generation and energy efficiency, fueling two races:
Спрос
Заказы и конверсия
Demand is accelerating, with record revenue and upward revisions to revenue growth forecasts for 2026. Customers are providing unprecedented visibility, including eight-quarter rolling forecasts and some conversations extending to 2030, and have announced more than 10 new fab projects just this quarter. Management expects 2027 to be another strong growth year.
Капзатраты
Инвестиции и мощности
Applied Materials is significantly expanding its manufacturing capacity, having nearly doubled manufacturing space over the past several years, with new centers opened in Singapore and elsewhere. They are hiring and training teams to double quarterly system output from current levels by 2028 and planning further expansion for 2030, with capex increasing but declining as a percentage of revenue int
Тон · Upbeat
Management expressed strong confidence in multi-year growth driven by AI, highlighting record results, increased customer commitments, and optimism for continued share gains and margin expansion.
Ограничения
Manufacturing capacitypersistent
Clean room space constraints are limiting customers' ability to add capacity, but they are finding creative solutions to take tools earlier.
This constraint is driving higher demand for AMAT's tools as customers prioritize output and yield, leading to increased revenue and growth.
“As 2026 has progressed, customers have found new ways to address clean room space constraints and significantly increase their demand for tool deliveries.”
Capacity is being doubled by 2028 to support revenue 'a wide range of output requirements', not a direct revenue forecast.
“we are now taking this further, hiring and training new manufacturing and customer support teams so that we have the capacity to double our quarterly system output from current levels by 2028.”
AGS (services) growth is being boosted by AI-driven utilization optimization, with 37,000 chambers connected to AIX software, and is expected to grow >20% in 2026.
“We already have more than 37,000 chambers in the field connected to our proprietary AIX software capabilities”
DRAM demand is surging, with a 'very significant increase' expected in H2, driven by AI and new fab capacity, and includes technology inflections like 3D DRAM.
“We now expect our China revenue to increase this calendar year, led by investments in 28 nanometer foundry logic where applied has strong technology differentiation and share.”
… manufacturing. For Applied, Epic co-innovation programs will enable us to be designed in to new chip and packaging architecture inflections increased R&D productivity and value sharing, and provide better multi-node visibility to guide our investments and resource allocation. Since our last earnings call, we announced that Broadcom will join Epic as an innovation partner to accelerate development of advanced chip packaging technologies for next-generation AI systems. We also signed Epic partnership agreements with Screen and UC Berkeley. This brings our total number of announced EPIC engagements to 11, spanning system companies, leading chip makers, top research universities, and innovation partners. The centerpiece of our EPIC platform is our brand new EPIC Center in Silicon Valley. We will move the first R&D tool into the clean room next week, and we are on track to start operations in the coming months. Before I hand over to Brice, let me briefly summarize. Demand for advanced semiconductors and semiconductor equipment continues to strengthen, and as customers find new ways to address clean room space constraints, we see higher demand for 2026 tool deliveries. With support …
Advanced packaging is expected to grow >70% in 2026, with new panel-level format expected to contribute significant revenue next year. — Confirms strong demand for advanced packaging (CoWoS etc) from TSMC and others, and indicates a potential new technology transition to panel-level packaging is gaining steam.
… AI compute architectures. The output from Epic will be more mature technology that can deliver high yields faster in volume manufacturing. For Applied, Epic co-innovation programs will enable us to be designed in to new chip and packaging architecture inflections increased R&D productivity and value sharing, and provide better multi-node visibility to guide our investments and resource allocation. Since our last earnings call, we announced that Broadcom will join Epic as an innovation partner to accelerate development of advanced chip packaging technologies for next-generation AI systems. We also signed Epic partnership agreements with Screen and UC Berkeley. This brings our total number of announced EPIC engagements to 11, spanning system companies, leading chip makers, top research universities, and innovation partners. The centerpiece of our EPIC platform is our brand new EPIC Center in Silicon Valley. We will move the first R&D tool into the clean room next week, and we are on track to start operations in the coming months. Before I hand over to Brice, let me briefly summarize. Demand for advanced semiconductors and semiconductor equipment continues to strengthen, and as …
DRAM demand is surging, with a 'very significant increase' expected in H2, driven by AI and new fab capacity, and includes technology inflections like 3D DRAM. — Confirms robust memory upcycle with customers like Micron and SK Hynix scrambling for supply, and highlights AMAT's exposure to technology shifts.
Advanced packaging is expected to grow >70% in 2026, with new panel-level format expected to contribute significant revenue next year. — Confirms strong demand for advanced packaging (CoWoS etc) from TSMC and others, and indicates a potential new technology transition to panel-level packaging is gaining steam.
… memory, Nakoda VMAX, our next generation plating system, and Optiquad CMP for advanced packaging, and two new eBeam systems also for advanced packaging that expand on our eBeam leadership in the front end. Advanced packaging is one of the most important areas for AI compute innovation and we see very strong multi-year growth for Applied. Applied is the overall leader in this market with strong positions in high bandwidth memory and 3D chiplet stacking and we now expect our overall packaging revenues to grow more than 70% in calendar 2026. We're also well positioned for future packaging inflections as the industry moves to new architectures and larger size panel formats. We have built a broad portfolio of next-generation technologies for panel, including digital lithography, deposition, etch, and e-beam review. In the global race to add semiconductor manufacturing capacity, our customers' ability to increase yield and output in their existing production fabs is incredibly valuable. This creates expanded opportunities for Applied to deliver new innovations in three key areas, services, process diagnostics and control, and new products that increase wafer output per area of …
China revenue is now expected to increase in 2026, driven by 28nm foundry logic, contradicting a prior view of potential digestion. — Despite US export controls, China's domestic fab build-out (particularly SMIC) is stronger than expected, providing a more durable demand than feared.
… Ramp readiness is a major priority, and the team added more than 1,000 customer support engineers. AGS is using AI and warehouse automation to grow as efficiently as possible, which is reflected in strong gross margin of 35.6%, up 180 basis points year over year, and operating margin of 30.1%, up 280 basis points year over year. From a regional perspective, China represented 26% of our semiconductor systems plus AGS revenue. We now expect our China revenue to increase this calendar year, led by investments in 28 nanometer foundry logic where applied has strong technology differentiation and share. Other revenue of $294 million is in line with our expectations. We generated record operating cash flow of over $3 billion. Capital expenditures were $707 million, resulting in free cash flow of $2.3 billion. We distributed $860 million to shareholders, including $420 million in dividends and $440 million in stock repurchases. We have $12.8 billion remaining in our share buyback authorization and continue to expect to distribute 80% to 100% of free cash flow to shareholders. I'll share our guidance for Q4. We expect company revenue of $10.25 billion, plus or minus $500 million, which is …
Gross margins are expected to continue expanding, backed by value-based pricing on an order book with longer lead times, even in existing products. — AMAT is successfully capturing pricing power in an environment of tight supply, which could pressure competitors' margins and alter the competitive balance.
Very helpful. And I guess as a follow-up on gross margins, you talked about value-based pricing, and I think we've heard from most companies around anything expedited. of Service, New Tools. But you talked about like for like pricing pushing higher. So could you speak maybe directly to that and how we should be thinking about the implications to your overall gross margins as we proceed into fiscal 27 and beyond? Thanks so much.
Sure. So, you know, over the last three years, approximately 300 basis points increased in our company level gross margins. One driver for that was our value-based pricing. that we do for every single tool. So the issue, CJ, was when we came through COVID, supply chain crisis, cost of inputs went up. We found ourselves needing to reprice every tool. So we put that value-based process in place. And that's what we do is examine the value of every single tool and put a new price on every single tool. We think that's required in an environment where the input costs change constantly. and then looking forward, we expect to be able to continue to improve our gross margins. We're already over 55% for our, you know, at the semi-systems level and, you know, value-based pricing will continue to be a part of that.
NAND market remains upgrade-focused, driven by layer count increases, rather than wafer start capacity additions, except in China. — AMAT sees no major capacity-led recovery in NAND for Western vendors, meaning spending is concentrated on technology transitions, not blanket capacity expansion.
… Ramp readiness is a major priority, and the team added more than 1,000 customer support engineers. AGS is using AI and warehouse automation to grow as efficiently as possible, which is reflected in strong gross margin of 35.6%, up 180 basis points year over year, and operating margin of 30.1%, up 280 basis points year over year. From a regional perspective, China represented 26% of our semiconductor systems plus AGS revenue. We now expect our China revenue to increase this calendar year, led by investments in 28 nanometer foundry logic where applied has strong technology differentiation and share. Other revenue of $294 million is in line with our expectations. We generated record operating cash flow of over $3 billion. Capital expenditures were $707 million, resulting in free cash flow of $2.3 billion. We distributed $860 million to shareholders, including $420 million in dividends and $440 million in stock repurchases. We have $12.8 billion remaining in our share buyback authorization and continue to expect to distribute 80% to 100% of free cash flow to shareholders. I'll share our guidance for Q4. We expect company revenue of $10.25 billion, plus or minus $500 million, which is …
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