Applied Materials, the world's largest maker of chip-manufacturing equipment, reported record fiscal third-quarter revenue and a stronger-than-expected fourth-quarter forecast on Thursday, betting that unabated demand for advanced AI chips will fuel continued spending on its semiconductor tools. Shares still fell about 5% as investors focused on margins and towering expectations.

The company forecast fourth-quarter revenue of roughly $10.25 billion, plus or minus $500 million, compared with analysts' average estimate of $9.54 billion, with adjusted earnings of $4.02 per share — also above expectations.

Third-quarter revenue reached a record $9.12 billion, its fastest growth in 18 quarters. The company also projected 2026 packaging growth of more than 70%, a key segment of the AI chip supply chain where advanced packaging has become a bottleneck for companies like Nvidia and AMD.

The results underscore how deeply the AI buildout now runs through the semiconductor supply chain: while chip designers capture headlines, equipment makers like Applied Materials, KLA and Lam Research are the ones turning record capital spending into revenue. The company raised its full-year outlook as analysts lifted estimates to roughly $33.3 billion in 2026 revenue.

The stock's muted reaction despite the beat reflects the bar set by the AI trade in 2026 — shares had rallied sharply ahead of the report, leaving little room for error. Applied Materials' guidance implies fourth-quarter revenue growth of about 51% year over year, a pace few companies its size are matching.

Sources