Applied Materials Inc. (AMAT) First Take Solid quarter and strong guidance, set against high expectations

Equity Research 13 August 2026 | 4:24PM EDT

Applied Materials Inc. (AMAT): First Take: Solid quarter and strong guidance, set against high expectations

Key stock takeaways: We expect the stock to be range bound following a solid James Schneider, Ph.D. | quarter with guidance well above the Street, set against very elevated investor Goldman Sachs & Co. LLC expectations. We believe investor positioning was very constructive heading into the Anmol Makkar print given incrementally more positive WFE commentary from peers and continued | supply tightness in advanced packaging. We also believe management’s constructive Goldman Sachs & Co. LLC

forward commentary is encouraging in terms of the sustainability it implies in the Luya You | coming quarters. We expect investors to focus on critical elements of management’s Goldman Sachs & Co. LLC commentary on today’s conference call, including (1) the drivers of the company’s Khalil Fenina WFE ramp in 2H26; (2) initial CY27 WFE growth expectations; (3) potential pricing | actions and margin impact. Goldman Sachs & Co. LLC

Quarterly results above the Street: Applied reported revenue of $9.12 bn, in line with GS at $9.14 bn and just above the Street at $9.04 bn, while gross margin of 50.4% was slightly above GS at 50.3% and the Street at 50.1%. Non-GAAP EPS of $3.50 was roughly in line with GS at $3.56 and the Street at $3.42. In Systems, DRAM revenue of $1.83 bn was well below GS at $2.16 bn and the Street at $2.10 bn, NAND revenue of $493 mn was far above GS at $274 mn and the Street at $336 mn, and Foundry, Logic and Other revenue of $4.72 bn was above GS at $4.60 bn and the Street at $4.50 bn. Additionally, Applied Global Services (AGS) revenue of $1.78 bn was in line with GS at $1.80 bn and the Street at $1.77 bn.

3Q guidance is well above the Street. Applied guided 4Q well above the Street on revenue and margins. Revenue was guided to $10.25 bn at the midpoint, which is well above GS at $9.68 bn and the Street at $9.66 bn. Non-GAAP EPS guidance of $3.82 - $4.22 (midpoint of $4.02) is above GS at $3.78 and the Street at $3.73.

Read-through to our coverage: We expect a neutral reaction for LRCX (Buy), and to a lesser extent for KLAC (Neutral) in our coverage given they have already reported and in light of their similar end-market exposures.

Price target and risks: Our 12-month target price of $645 is based on a 32X P/E multiple applied to estimated normalized EPS of $20.00. Key downside risks: (1) incremental export restrictions; (2) local China-based supplier share gains.

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

Goldman Sachs Applied Materials Inc. (AMAT)

Exhibit 1: Applied Materials - Variance summary

2Q26 Financials ($ mn, except EPS) Actual GS Street Actual/GS Actual/Street DRAM 1,830 2,162 2,103 -15.3% -13.0% NAND % 46.7% Foundry, Logic and Other 4,717 4,596 4,503 2.6% 4.7% Applied Global Services (AGS) 1,781 1,798 1,769 -1.0% 0.7% Other % 1.7% Total Revenue 9,115 9,139 9,037 -0.3% 0.9% QoQ 15.2% 15.5% 14.3% YoY 24.8% 25.2% 23.8% Gross Margin 50.4% 50.3% 50.1% +9 bps +26 bps Operating Margin 34.0% 34.4% 33.8% -43 bps +22 bps Non-GAAP EPS $3.50 $3.56 $3.42 -1.8% 2.3%

Source: Company data, Goldman Sachs Global Investment Research, Visible Alpha Consensus Data

Exhibit 2: Applied Materials - Guidance 3Q26E Financials ($ mn, except EPS) High Low Guidance (midpoint) GS Street Guidance/GS Guidance/Street Total Revenue 10,750 9,750 10,250 9,681 9,664 5.9% 6.1% QoQ 12.5% 5.9% 6.9% YoY 50.7% 42.4% 42.1% Non-GAAP EPS $4.22 $3.82 $4.02 $3.78 $3.73 6.5% 7.9%

Source: Company data, Goldman Sachs Global Investment Research, Visible Alpha Consensus Data

AMAT 12m Price Target: $645.00 Price: $548.15 Upside: 17.7%

Buy CL GS…