Applied Materials Falls After Record Fiscal Third-Quarter Results

Applied Materials shares closed at $507.18 on August 14, down $27.36, or 5.12%, after the company released fiscal third-quarter 2026 results following the August 13 market close. Trading volume was 12.5 million shares, according to StockAnalysis.com historical data. The S&P 500 declined 0.2% in the same session.

The company reported record revenue of $9.115 billion for the quarter ended July 26, up 25% from a year earlier and 15.2% sequentially. GAAP diluted earnings per share were $3.17, and non-GAAP diluted earnings per share reached a record $3.50, up 41% year over year, according to Applied Materials’ earnings release.

Applied also generated record operating cash flow of $3.037 billion. GAAP operating income was a record $3.075 billion, equal to 33.7% of revenue, while GAAP gross margin was 50.3%. The company returned $860 million to shareholders through $440 million in share repurchases and $420 million in dividends.

Expectations and the Market Reaction

The Associated Press reported that Applied’s quarterly profit and revenue exceeded analyst expectations. The reported results also exceeded the midpoints of Applied’s May outlook, which called for $8.95 billion in revenue and $3.36 in non-GAAP EPS for the fiscal third quarter, while remaining within the company’s stated ranges. The prior outlook appears in Applied’s second-quarter release.

AP reported that elevated expectations after a major share-price rally pressured the stock. That explanation is a supported interpretation of a decline following results that exceeded estimates and management’s guidance midpoints. It does not establish a single cause for the 5.12% move because weak U.S. retail-sales data, higher oil prices and a broader market decline also coincided with the session, as AP reported in its market coverage.

The company’s fourth-quarter outlook called for revenue of $10.25 billion, plus or minus $500 million, and non-GAAP EPS of $4.02, plus or minus $0.20. The revenue midpoint implies about 12.5% sequential growth from the reported third-quarter level. Claims that the share decline reflected weak fourth-quarter guidance are unsupported by the release because the guidance midpoint was above third-quarter revenue and earnings.

Applied said it was further raising its calendar-2026 Semiconductor Systems revenue expectations because of increased customer demand visibility. Chief Executive Officer Gary Dickerson described AI-related demand as unprecedented. The company did not disclose a revised growth percentage, so the size of that outlook increase cannot be independently determined from the release.

Demand Exposure and Execution Tests

Semiconductor Systems generated $7.040 billion in the quarter, about 77% of total revenue. Foundry, logic and other customers represented 67% of that segment’s revenue, DRAM represented 26%, and flash memory represented 7%. Applied Global Services generated $1.781 billion.

Chief Financial Officer Brice Hill identified DRAM, leading-edge foundry-logic and advanced packaging as areas expected to drive second-half growth. The concentration of revenue in Semiconductor Systems means results remain closely tied to semiconductor capital spending, particularly in foundry-logic and DRAM.

China generated $2.506 billion, or 28%, of quarterly revenue, down from 35% a year earlier. Taiwan represented 22% of revenue, Korea 17% and the United States 15%. China remains financially material, and changes in export controls, license availability, tariffs or Chinese customer spending could affect future results.

Management said it is investing in manufacturing capacity for projected demand through the end of the decade. Those investments may support customer demand and potential market-share gains. They also increase exposure to utilization risk if AI-related capital spending or fab schedules weaken.

The next reported test is the fiscal fourth quarter, which Applied’s fiscal calendar lists as closing October 25, with an earnings call projected for November 12, 2026, according to its events page. Investors will be able to assess fourth-quarter revenue and EPS, DRAM and foundry-logic growth, gross-margin progression, and any quantified update to calendar-2026 or 2027 expectations.

MacroShed Markets is informational analysis, not investment advice.