Applied Materials Beats Estimates as AI Chip Demand Lifts Outlook

Applied Materials reported solid fiscal third-quarter results and issued a better-than-expected fourth-quarter forecast, but the outlook failed to impress investors accustomed to lofty expectations.

Applied Materials is benefiting from rising semiconductor-equipment spending as chipmakers expand capacity for AI and advanced computing. [Photo: Applied Materials Facebook]

The company is benefiting from growing spending on AI processors, memory and advanced semiconductor manufacturing, Nate Wolf reported for Barron's Daily.

Applied Materials reported third-quarter adjusted earnings of $3.50 per share and revenue of $9.12 billion, up 25% from a year earlier.

The company forecast fourth-quarter revenue of about $10.25 billion at the midpoint and adjusted earnings of $4.02 per share, both above Wall Street expectations.

Reuters reported that analysts had expected fourth-quarter revenue of about $9.54 billion and adjusted earnings of $3.69 per share.

Despite the better-than-expected outlook, Applied Materials shares fell more than 5% in after-hours trading as investors focused on the company's high valuation and elevated expectations.

Applied Materials is competing with companies including KLA and Lam Research in the semiconductor-equipment industry.

Growing AI-related investment is also supporting spending on memory and advanced packaging. Applied Materials has said it expects more than 70% growth in advanced-packaging revenue in 2026.