TLDR
- Applied Materials (AMAT) shares jumped 13% after hours Thursday following a strong Q1 earnings beat that topped analyst expectations.
- The chipmaker reported Q1 adjusted earnings of $2.38 per share on $7.01 billion revenue, exceeding Wall Street forecasts.
- CEO Gary Dickerson projects semiconductor business growth exceeding 20% in 2026 as AI infrastructure spending accelerates.
- Current quarter guidance of $7.15-$8.15 billion revenue and $2.44-$2.84 EPS surpasses analyst estimates of $7.01 billion and $2.28 per share.
- Profit surged 70% year-over-year to $2.03 billion as the company doubled manufacturing capacity to meet AI chip demand.
Applied Materials delivered impressive first-quarter results Thursday that sent shares soaring in extended trading. The semiconductor equipment maker reported adjusted earnings of $2.38 per share on revenue of $7.01 billion for its fiscal quarter ending January.
Wall Street had expected $2.21 per share on $6.87 billion in revenue. The beat marks another win for chipmaking equipment companies riding the AI wave.
Profit jumped 70% to $2.03 billion compared to $1.19 billion in the year-ago quarter. Shares climbed 13% to $373 in after-hours trading Thursday.
The stock has gained 78% over the past 12 months through Thursday’s regular session close.
AI Boom Drives Record Growth
CEO Gary Dickerson outlined an aggressive growth trajectory on Thursday’s earnings call. He expects the semiconductor business to expand more than 20% this calendar year.
“The race to build out AI infrastructure is driving unprecedented spending on semiconductors, semiconductor manufacturing capacity and research and development,” Dickerson said.
The executive moved up his forecast for when global semiconductor revenues could reach $1 trillion. He now targets 2026 for that milestone, pulling the timeline forward from his previous 2027 estimate.
AI developers require higher-performing and more energy-efficient chips. That need is fueling growth in memory and packaging segments, according to Dickerson.
Guidance Crushes Expectations
Applied Materials issued bullish guidance for its current quarter. The company forecasts revenue between $7.15 billion and $8.15 billion with adjusted earnings of $2.44 to $2.84 per share.
Analysts surveyed by FactSet had projected $7.01 billion in revenue and $2.28 per share in adjusted earnings. The guidance represents a substantial beat on both metrics.
CFO Brice Hill noted the company has nearly doubled its system manufacturing capability. Applied Materials also increased inventories to keep pace with surging demand.
Major customers are providing longer-term visibility into their needs. They want to ensure Applied Materials has the operational capacity and service support ready for upcoming production ramps, Dickerson explained.
Analyst Reaction
KeyBanc analyst Steve Barger raised his price target on Applied Materials to $450 from $380 while maintaining an Overweight rating. He sees AI as a “long-duration growth catalyst” providing unusual demand visibility.
The strong results echo positive trends across the chip equipment sector. Fellow manufacturers ASML Holding and Lam Research have delivered similar optimistic outlooks recently.
Demand is expected to be weighted toward the second half of 2026, according to Dickerson. Applied Materials appears well-positioned to capitalize on the ongoing AI infrastructure buildout driving semiconductor equipment orders higher.
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