Applied Materials Inc. (AMAT) Strong guidance sets the stage for accelerating growth in 2027

Equity Research 13 August 2026 | 7:13PM EDT

Applied Materials Inc. (AMAT): Strong guidance sets the stage for accelerating growth in 2027

Key stock takeaways: We expect the stock to trade modestly lower 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. On the | margin, we believe the company’s near-term outlook may have fallen short of the Goldman Sachs & Co. LLC

most bullish investor expectations - but ultimately, we believe the company’s strong Luya You | results set the company up well to deliver market share gains against the backdrop of Goldman Sachs & Co. LLC accelerating WFE growth in 2027. Although management declined to numerically Khalil Fenina raise its prior growth commentary for CY26, the company did indicate it plans to | grow revenue QoQ in the January quarter - which implies Systems growth of ~40%. Goldman Sachs & Co. LLC

We believe many of the investor misconceptions that weighed on the stock in CY25 should reverse as Applied benefits from mix-related tailwinds tied to increased spending on foundry/logic, DRAM, and advanced packaging. We are Buy rated on AMAT (on the CL) as we believe the company is positioned to outperform peers on a relative basis given its high relative exposure (over 60%) to deposition and etch, where we expect spending intensity to increase through 2027.

Read-through to our coverage: We expect a relatively neutral reaction for LRCX (Buy), and to a lesser extent for KLAC (Neutral) in our coverage given similar end-market exposures, and the fact that these companies have already reported.

Quarterly results just 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.

n 2026 and long-term outlook: Applied expects to grow its revenue in the context of a strongly growing WFE market in CY26, and the company continues to expect its semiconductor equipment business to track above its prior 30% growth guidance in 2026. Although management declined to numerically raise its prior commentary, the company did indicate it plans to grow revenue QoQ in the January quarter, which implies Systems growth of ~40%. The company continues

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Goldman Sachs Applied Materials Inc. (AMAT)

to expect another strong WFE growth year in CY27, with growth likely to continue into CY28. The company believes it is better positioned to capture market growth in the coming year, as it sees the fastest growing market segments as leading-edge logic, DRAM, and advanced packaging, areas where Applied has stronger market share - collectively composing ~80% of overall WFE growth. n Gross margin and pricing: Applied delivered gross margins of 50.4%, just above Street expectations. Going forward, the company guided gross margins to expand modestly in the coming quarters, particularly in light of lower China exposure in the current quarter.…