Applied Materials — Q4 and Fiscal Year 2026 Earnings Summary

Financial Performance:

• Q4 FY2026 revenue reached a record $10.41 billion, up 53% year-over-year (YoY) from $6.80 billion; FY2026 total revenue was a record $34.45 billion, up 21% YoY from $28.37 billion.
• Q4 GAAP gross margin was 50.4% (up 240 bps YoY); non-GAAP gross margin was 50.6% (up 250 bps YoY). FY2026 GAAP gross margin was 50.0% and non-GAAP was 50.1%, both up 130 bps YoY.
• Q4 GAAP EPS was $3.40 (up 43% YoY); non-GAAP EPS was a record $4.16 (up 92% YoY). FY2026 GAAP EPS was $12.62 (up 46% YoY); non-GAAP EPS was $12.89 (up 37% YoY).
• Q4 GAAP operating income was $3.66 billion (35.1% margin); non-GAAP operating income was $3.68 billion (35.3% margin). FY2026 GAAP operating income was $11.09 billion (32.2% margin); non-GAAP was $11.42 billion (33.1% margin).
• Q4 cash from operations was $3.30 billion; FY2026 cash from operations was $8.87 billion.
• Q4 non-GAAP free cash flow was $2.6 billion; FY2026 non-GAAP free cash flow was $6.2 billion (up 9% YoY).
• Shareholder distributions totaled $2.42 billion in Q4 ($2.00 billion in repurchases, $421 million in dividends) and $4.75 billion for FY2026 ($3.18 billion in repurchases, $1.57 billion in dividends).
• Balance sheet as of Oct 25, 2026: Total assets $45.40 billion; cash and cash equivalents $7.24 billion; short-term investments $2.10 billion; total current liabilities $11.58 billion; total debt $6.53 billion ($1.30 billion short-term, $5.23 billion long-term).

Guidance and Future Outlook:

• Q1 FY2027 total revenue guidance is $11.10 billion, plus or minus $500 million.
• Q1 FY2027 non-GAAP diluted EPS guidance is $4.35, plus or minus $0.20.
• Guidance excludes known acquisition charges of $0.01 per share and includes a net income tax benefit of $0.04 per share related to intra-entity intangible asset transfers.
• Management expects to grow the Semiconductor Systems business more than 40% in calendar 2026.

Business Segments and Product Lines:

• Semiconductor Systems: Q4 FY2026 revenue was $7.996 billion (up 64% YoY); FY2026 revenue was $26.14 billion (up 22% YoY). Non-GAAP gross margin was 55.2% in Q4 and 55.0% for FY2026.
• Applied Global Services: Q4 FY2026 revenue was $1.896 billion (up 26% YoY); FY2026 revenue was $6.901 billion (up 20% YoY). Non-GAAP gross margin was 35.1% in Q4 and 35.0% for FY2026.
• Other: Q4 FY2026 revenue was $517 million; FY2026 revenue was $1.403 billion.
• New Product Launch: Introduced the VeritySEM™ 20 metrology system, a next-generation critical dimension scanning electron microscope (CD-SEM) designed for high-NA EUV patterning control.
• Segment Reclassification: The 200-millimeter equipment business was moved to Semiconductor Systems effective Q1 FY2026; corporate support costs are now fully allocated to operating segments.

Market and Competitive Landscape:

• AI continues to fuel strong incremental demand for semiconductors.
• Applied Materials holds technology leadership in critical areas of the wafer fab equipment market.
• Geographic revenue mix for Q4 FY2026: Taiwan (28%), China (25%), Korea (17%), United States (13%), Southeast Asia (6%), Japan (6%), Europe (5%).

Risks and Challenges:

• Forward-looking statements are subject to risks including demand fluctuations for semiconductor chips and electronic devices, AI technology development, and supplier capacity constraints.
• Risks include global economic, political, and industry conditions, trade issues, export regulations, tariffs, and geopolitical conflicts.
• Potential impacts from new technology introductions, timing of technology transitions, and market acceptance of new products.
• Concentrated customer base, cybersecurity incidents, and ability to obtain and protect intellectual property rights.

Management Commentary and Tone:

• Gary Dickerson, President and CEO, stated the company delivered record results and is positioned for multi-year revenue and profit growth driven by AI.
• Brice Hill, Senior Vice President and CFO, highlighted a 53% YoY revenue increase and 92% non-GAAP EPS growth, noting record quarterly free cash flow and the largest quarterly share buyback in over eight years.
• Management expressed confidence in outperforming the wafer fab equipment (WFE) market over the coming years due to leadership in materials engineering.

Other Key Points:

• EPIC Center: Unveiled the EPIC Center in Silicon Valley, the world's largest facility for collaborative semiconductor R&D. Total announced EPIC engagements reached 15.
• New Partnerships: Added four new EPIC partners: Intel (founding partner for next-gen transistors/interconnects), KIOXIA (next-gen memory), Besi (expansion of hybrid bonding/interconnects), and UCLA (research partner).
• Strategic Investment: Entered an accelerated share purchase agreement to increase investment in Besi to approximately 20% of outstanding shares.
• Legal Settlement: A $253 million charge in FY2025 was related to a settlement with the U.S. Commerce Department Bureau of Industry and Security regarding export controls compliance.
• Restructuring: Workforce reduction plan announced in Q4 FY2025 resulted in restructuring charges; Q4 FY2026 saw a reversal of $4 million.
• Investor Events: Hosted an Investor Breakfast Presentation during SEMICON West to outline long-term growth expectations.