Applied Materials Inc.

Record Q3 results + strong profitability/margins - Revenue $9.1B (+15% QoQ, +25% YoY); non-GAAP gross margin 50.4% (+40 bps QoQ, +150 bps YoY). - Non-GAAP operating margin 34% (+190 bps QoQ, +330 bps YoY). - Non-GAAP EPS $3.50 (+22% QoQ, +41% YoY). - Signaling sustained operating leverage: OpEx as % of revenue at the lowest in ~4 years. - Good: Indicates strong demand + value capture; Surprising/strong: gross margin expansion for 13 consecutive quarters YoY.

FY26 outlook (Q4 guidance) and where growth is expected - Q4 (fiscal) guidance: revenue $10.25B ± $500M (+51% YoY); non-GAAP EPS $4.02 ± $0.20 (+85% YoY). - Segment outlook for Q4: - Semiconductor Systems: ~$7.9B (+62% YoY) - AGS (services): ~$1.84B (+22% YoY) - Other: ~$510M (display-related; they now assume ~$400M/q average through 2027 for modeling). - Management expects particularly strong 2H calendar-year growth in DRAM plus leading-edge logic + advanced packaging. - Challenge: Q1 fiscal 27 is a 14-week quarter, so OpEx steps up (margin guided roughly flat near term).

Calendar 2026/2027 growth drivers + key forecast improvements - They say they’ve again increased upward revisions to the 2026 revenue growth forecast during the past 3 months, and expect to grow faster than the overall market. - Visibility: customers provide rolling 8-quarter forecasts; largest customers give longer-term commitments. - 2027 confidence: due to the supply-demand gap in advanced chips, and customers focusing on yield/output optimization while building new fabs. - Market mix: leading-edge foundry logic, DRAM, and advanced packaging expected to be about ~80% of wafer fab equipment growth in 2026–2027. - Good: stronger-than-previous semi systems demand trajectory (they referenced “>30%” growth last call and now implies even stronger).