01—Abstract
Summary
Summary of the 10-Q filed May 21, 2026. Cited figures are marked; the original filing is the authoritative source.
Applied Materials, Inc. (AMAT) reported a strong financial performance for the quarter ending April 26, 2026, with significant year-over-year increases in revenue and net income.
Revenue grew by 11% to $7.91 billiona, driven by robust performance in both its Semiconductor Systems and Applied Global Services segments. Net income surged by approximately 31%, reaching $2.81 billion, translating to diluted earnings per share of $3.51, a substantial improvement from the prior year. The company's operational efficiency and strategic investments in research and development appear to be paying off, as evidenced by the expanded gross and operating margins.
Despite increased R&D spending, the company managed its general and administrative expenses effectively, contributing to the overall profitability. The strong financial results, coupled with a healthy balance sheet and substantial cash reserves, position AMAT favorably within the dynamic semiconductor industry.
02—Key points
Key Highlights
- Revenue increased 11% year-over-year to $7.91 billion for the quarter.
- Net income significantly increased by 31% to $2.81 billion.
- Diluted earnings per share (EPS) rose to $3.51 from $2.63 in the prior year's quarter.
- Gross margin improved to 49.9% from 49.1% in the prior year's quarter.
- Operating margin expanded to 31.9% from 30.5% in the prior year's quarter.
- Cash flow from operations remained strong, totaling $2.53 billion for the first six months of the fiscal year.
- The company continues to return value to shareholders through dividends and share repurchases, with $13.2 billion remaining available under its stock repurchase program.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Applied Materials kept $0.35.
- Revenue$7.91B100.0%
- Cost of revenue−$3.96B50.1%
- Gross profit$3.95B49.9%
- Operating costs−$1.42B18.0%
- Operating income$2.52B31.9%
- Interest, other & tax$283.0M3.6%
- Net income$2.81B35.5%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed May 21, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $7.91B$7.10B | +11.4% |
| Cost of Revenue | $3.96B$3.62B | +9.6% |
| Gross Profit | $3.95B$3.48B | +13.3% |
| R&D Expenses | $1.03B$893.00M | +15.0% |
| SG&A Expenses | $397.00M$423.00M | −6.1% |
| Operating Expenses | $1.42B$1.32B | +8.2% |
| Operating Income | $2.52B$2.17B | +16.3% |
| Net Income | $2.81B$2.14B | +31.3% |
| EPS (Basic) | $3.53$2.64 | +33.7% |
| EPS (Diluted) | $3.51$2.63 | +33.5% |
| Shares Outstanding (Basic) | 794.00M809.00M | −1.9% |
| Shares Outstanding (Diluted) | 799.00M812.00M | −1.6% |
05—Questions
Frequently Asked Questions
What were the primary drivers of revenue growth in this quarter?
Revenue growth was primarily driven by strong performance in both the Semiconductor Systems segment, which saw a 10% increase year-over-year, and the Applied Global Services (AGS) segment, which experienced a 17% increase. This growth was supported by increased customer spending in Foundry, Logic, and DRAM markets, as well as higher long-term service agreement revenue and customer spending on spares within AGS.
How did the company manage its operating expenses?
While Research, Development, and Engineering (RD&E) expenses increased to support ongoing investments in product development, the company effectively managed other operating expenses. Marketing and selling expenses saw a modest increase, but General and Administrative (G&A) expenses decreased year-over-year. Notably, the company incurred a significant legal settlement charge of $253 million in the first six months of the fiscal year related to an export controls compliance matter.
What is the company's financial outlook and capital allocation strategy?
The company's strong performance suggests a positive outlook. Management believes that cash generated from operations, combined with existing cash balances and borrowing capacity, will be sufficient to meet liquidity requirements for the next 12 months. Applied Materials continues to focus on returning capital to shareholders through dividends and an active share repurchase program, with a substantial amount still available for future repurchases.
What are the key risks or uncertainties facing the company?
The company faces risks related to the cyclical nature of the semiconductor industry, global economic volatility, geopolitical tensions, global trade issues and export regulations (particularly concerning China), supply chain disruptions, intense competition, intellectual property protection, cybersecurity threats, and the ability to attract and retain key talent. Significant investments in R&D and capital expenditures are ongoing.
06—Continue