Applied Materials delivered a record third quarter of fiscal 2026 on August 13, 2026, with revenue of $9.12 billion up 25% year over year, the highest sequential revenue growth in company history, and management raised its calendar 2026 Semiconductor Systems revenue outlook while signaling that 2027 shapes up as another year of strong growth. The company is being pulled forward by AI-driven materials engineering demand, particularly in DRAM, leading-edge foundry-logic, and advanced packaging, and the 13th consecutive quarter of year-over-year gross margin expansion shows that pricing power is holding up even as the build cycle accelerates.
Our reading of the print is that the market is still treating AMAT as a cyclical wafer fab equipment vendor when the data increasingly points to a platform whose mix shift toward high-value deposition, etch, and advanced packaging tools is structurally widening margins. The $0.32 of legal settlement charges that have already cleared the income statement, the recast segment structure that lifts the 200mm business into Semiconductor Systems, and the Singapore $500 million Tampines campus expansion all describe a company building capacity for what management calls "the end of the decade" rather than the next two quarters. We see the equity as priced for cyclical normalization while the operating data is pointing toward structural mix uplift.
The single load-bearing risk is China concentration, which fell from 35% of revenue a year ago to 28% in the latest quarter, and the related export-control overhang that produced the $253 million BIS settlement paid in fiscal Q2. The falsifiable clock is the next two prints: the fourth fiscal quarter of 2026, guided to $10.25 billion in revenue and $4.02 in non-GAAP diluted EPS, and the first fiscal quarter of 2027, which is when management has indicated that capacity additions from Tampines begin to be visible in the run rate.