tapebrief
AMAT · Q2 2026

AMAT · Q3 2026 Earnings

Bullish

Applied Materials

Reported August 13, 2026

30-second summary

Applied delivered Q3 revenue of $9.115B (+25% YoY), beating consensus of $9.01B by 1.2% and the prior $8.95B guide midpoint by $165M, with non-GAAP EPS of $3.50 above the $3.36 midpoint of the $3.16–$3.56 guide range (+$0.14, within range) and 3.2% ahead of the $3.39 consensus. The signal is the Q4 guide: $10.25B ±$500M implies +42.4% YoY against the $7.199B Q4 FY25 base (+35.4% to +49.3% across the range) — the third consecutive quarter of upside re-rating on the calendar-2026 equipment thesis, with management explicitly "further raising" Semiconductor Systems expectations from the prior >30% floor. Non-GAAP gross margin at 50.4% marks the 13th consecutive quarter of YoY expansion and keeps the 50%+ threshold intact.

Headline numbers

EPS

Q3 FY2026

$3.50

+3.2% vs est.

Revenue

Q3 FY2026

$9.12B

+25.0% YoY

+1.2% vs est.

Gross margin

Q3 FY2026

50.3%

Free cash flow

Q3 FY2026

$2.33B

Operating margin

Q3 FY2026

33.7%

Key financials

Q3 FY2026
MetricQ3 FY2026Q3 FY2025YoYQ2 FY2026QoQ
Revenue$9.12B$7.30B+24.8%$7.91B+15.2%
EPS$3.50$2.48+41.1%$2.86+22.4%
Gross margin50.3%48.8%+150bps49.9%+40bps
Operating margin33.7%30.6%+310bps31.9%+180bps
Free cash flow$2.33B$2.05B+13.7%$0.21B+1009.5%

Guidance

Applied Materials decisively beat Q3 guidance across revenue and EPS, and raised FY2026 Semiconductor Systems expectations while guiding Q4 FY2026 at record levels, signaling sustained strength in DRAM, foundry-logic, and advanced packaging.

Guidance is issued one quarter forward. The Prior-guide column references the guide issued last quarter for the period just reported; the New-guide column is for next quarter.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
RevenueQ3 FY2026$8,950 million +/- $500 million$9,115 million+165 million above high end of guideBeat
Non-GAAP Diluted EPSQ3 FY2026$3.36 +/- $0.20$3.50+$0.14 above high end of guideBeat
Semiconductor Systems RevenueQ3 FY2026around $6.9 billion$7.04 billion+$140 million above guideBeat
Applied Global Services RevenueQ3 FY2026about $1.75 billion$1.781 billion+$31 million above guideBeat
Non-GAAP Gross MarginQ3 FY2026approximately 50.1%50.3%+0.2 points above guideBeat

New guidance

MetricPeriodGuideYoY
RevenueQ4 FY2026$10,250 million +/- $500 million+50.7% to +51.5% YoY
Non-GAAP Diluted EPSQ4 FY2026$4.02 +/- $0.20—

Reaffirmed unchanged this quarter: Semiconductor Systems Revenue Growth (Full Year) (further raising expectations)

Segment performance

Q3 FY2026
SegmentQ3 FY2026Q3 FY2025YoY
Semiconductor Systems$7.04B$5.427B+29.7%
Applied Global Services$1.781B$1.6B+11.3%

Capacity & utilization

Q3 FY2026
SegmentQ3 FY2026Q3 FY2025YoY
EPIC Center Partnerships11 engagements——
Employees (Full-time)38,900——

Profitability

Q3 FY2026
SegmentQ3 FY2026Q3 FY2025YoY
Semiconductor Systems Gross Margin55.3%——
Semiconductor Systems Operating Margin37.7%——
Applied Global Services Gross Margin35.6%——
Applied Global Services Operating Margin30.1%——
Non-GAAP Free Cash Flow$2.33 billion——
Gross Margin YoY Expansion13 consecutive quarters——

Other KPIs

Q3 FY2026
SegmentQ3 FY2026YoY
United States$1.367B+100.0%
China$2.506B-1.7%
Taiwan$2.025B+9.9%

Management tone

Tone analysis was not possible this quarter — no earnings call transcript was available. The commentary below is drawn from the press release only.

Management "further raised" the calendar-2026 equipment target from >30% and pre-committed 2027 as another growth year. From the release: "we are further raising our Semiconductor Systems revenue expectations for calendar 2026" and "we expect another strong growth year for Applied Materials in 2027." Lifting a full-year framework while simultaneously pre-committing the following year is what management does when eight-quarter customer forecasts have firmed into bookings, not intentions. The Q2 language of "we are confident we will grow faster than the market this year" survives verbatim; the substance underneath it is now anchored in a $10.25B Q4 guide.

The growth-driver naming shifted to lead with DRAM. From the release: "we expect continued strong revenue growth in the second half of the calendar year, particularly in DRAM as well as leading-edge foundry-logic and advanced packaging." DRAM now leads the list. That is consistent with the mix data — DRAM at 26% of Semi Systems vs 22% a year ago — and it matches the HBM-driven memory capex cycle. Advanced packaging remains in the list, extending the >50% calendar-2026 growth commitment from Q2.

11 EPIC Center engagements is the first quantitative disclosure on the platform metric. The Q2 brief did not carry a specific engagement count; this quarter's press release names 11 EPIC Center partnerships, with three additional partners (Broadcom, UC Berkeley, SCREEN SPE) named this quarter. This establishes the metric as a tracked KPI going forward — and gives investors a way to measure whether Applied's R&D-consortium strategy is compounding customer touchpoints.

Answers to last quarter's watch list

Whether Q3 Semi Systems prints above the ~$6.9B guide — Semi Systems printed $7.04B, $140M above guide (+2.0%). Combined with the Q4 guide of ~$10.25B total revenue implying Semi Systems steps materially higher again, the >30% calendar-2026 commitment is confirmed to be running ahead of the trajectory — hence the "further raising" language.
Resolved positively
Whether management revises the calendar-2026 equipment growth target higher again at Q3 — Yes, explicitly. The release states Applied is "further raising our Semiconductor Systems revenue expectations for calendar 2026." No specific new percentage was disclosed, but the directional revision is unambiguous.
Resolved positively
Q3 gross margin actual vs the ~50.1% guide — Non-GAAP gross margin printed 50.4%, +30bps above guide and marking the 13th consecutive quarter of YoY expansion. The 50%+ threshold has now been sustained for two consecutive quarters, and Semi Systems non-GAAP operating margin at 38.0% reinforces Hill's portfolio-mix framing.
Resolved positively
Whether China sustains the ~$2.1B+ quarterly run rate — China revenue printed $2.506B (-1.7% YoY), materially above the "flat to slightly higher" full-year framing Hill provided last quarter. The structural-decline narrative that anchored FY25 is now decisively behind — China is holding at a higher plateau than management guided to. The "flat to slightly higher" full-year framing needs another revision upward. Status: Resolved positively for revenue, but the framework is stale
Advanced packaging revenue contribution — The release reiterates advanced packaging as a growth driver but did not disclose a Q3 dollar breakout or update the >50% calendar-2026 growth commitment.
Continue monitoring
AGS sustainable growth rate confirmation — AGS printed +21.8% YoY at $1.781B — running well above the "mid-teens and potentially higher" sustainable growth rate raised last quarter. The "potentially higher this year" caveat is now clearly operative.
Resolved positively
2027 and 2028 framing specificity — Management pre-committed 2027 as "another strong growth year for Applied Materials" — the first explicit multi-year growth commitment in the sequence, replacing the Q2 "record year for the industry" language with a company-specific claim. No 2028 framing in the release. Status: Resolved positively for 2027; 2028 still open

What to watch into next quarter

Whether Q4 Semi Systems prints in line with the ~$8.0B implied by the $10.25B total revenue guide — the cleanest test of whether the "further raising" language is fully in the guide or has additional upside for the Q4 print

Whether management quantifies the new calendar-2026 Semi Systems growth number at Q4 — "further raising" from >30% needs a specific replacement figure; anything in the >35% range would validate the buy-side ">40%?" thesis

Q4 non-GAAP gross margin trajectory — 50.4% Q3 actual sets a base; whether the mix-driven expansion continues or the guide reveals compression at record revenue scale

China revenue at Q4 — Hill's "flat to slightly higher" full-year framing looks overtaken by the ~$2.5B Q3 print; whether Q4 sustains ~$2.5B or moderates back toward $2.1B determines whether the framework needs a formal upward revision

Advanced packaging quantification — the >50% calendar-2026 growth commitment still lacks a dollar anchor two quarters in; a segment breakout would size the SAM management keeps naming

2027 sizing — Dickerson pre-committed 2027 as another growth year in the release; watch whether the Q4 call brings a percentage or dollar framework, or whether it stays qualitative

EPIC Center engagement count trajectory — 11 partnerships is the first disclosed data point; watch whether the metric is refreshed at Q4 as a tracked platform KPI

Sources

  1. Applied Materials Q3 FY2026 earnings press release — https://www.sec.gov/Archives/edgar/data/6951/000162828026056699/exhibit991q32026earningsre.htm

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