Applied Materials, Inc.

Record momentum & strong financial performance (good/surprising) - Fiscal Q3’26 revenue: $9.1B, +25% YoY and +15% QoQ (described as highest QoQ growth in company history). - Non-GAAP gross margin: 50.4% (up +150 bps YoY, +40 bps QoQ); Non-GAAP operating margin: 34% (up +330 bps YoY). - Non-GAAP EPS: $3.50 (+41% YoY, +22% QoQ). - 13th consecutive quarter of YoY gross margin expansion; record operating cash flow > $3B and free cash flow $2.3B.

Guidance / outlook: strong growth expected, but near-term margin guidance is conservative (mixed) - Fiscal Q4 guidance: revenue $10.25B ± $500M (+51% YoY), Non-GAAP EPS $4.02 ± $0.20 (+85% YoY). - Segment outlook (Q4): - Semiconductor Systems: ~$7.9B (+62% YoY) - AGS: ~$1.84B (+22% YoY) - Non-GAAP gross margin Q4 guided ~50.4% (slightly up +32 bps YoY)—flat sequentially rather than expanding further, due to ramp headwinds (services/engineers and capacity buildup costs). - Calendar 2026 growth expectations were raised again during the quarter; management expects Applied to grow faster than the overall market in calendar 2026. - Calendar 2027 expectation: “another strong year” with confidence supported by expanded customer visibility.

Demand drivers: AI infrastructure build-out + capacity gap for advanced chips (good/opportunity) - Management cites AI compute expansion creating a large demand-supply gap for advanced chips; customers are: - Running leading-edge logic and DRAM fabs at full capacity - Adding new fab projects (management cited >10 new fab projects announced in the quarter) - Increasing clean room capacity / tool delivery pace (including creative approaches to address clean-room constraints) - Growth emphasis: leading-edge foundry logic, DRAM (incl. HBM packaging), and advanced packaging. - They expect these areas to represent about ~80% of wafer fab equipment growth in 2026 & 2027.