Applied Materials reported fiscal third-quarter results after the bell on August 13, 2026, delivering stronger-than-expected earnings and guidance, yet the stock fell more than 5% in extended trading as investors judged the beat insufficient after a massive 2026 rally.
Revenue rose 25% year over year to $9.12 billion, above Wall Street's estimate of $8.99 billion, while adjusted earnings climbed 41% to $3.50 per share. The company forecast fourth-quarter revenue of about $10.25 billion and adjusted EPS of $4.02, ahead of consensus. Semiconductor Systems revenue reached $7.04 billion, with DRAM accounting for 26% of sales, up from 22% a year earlier. Applied Materials also recorded its 13th consecutive quarter of year-over-year gross-margin expansion, with non-GAAP gross margin at 50.4% and adjusted operating margin at 34%.
CFO Brice Hill said customer visibility was longer than ever, with some conversations extending to 2030, and he expects strong second-half growth in DRAM, leading-edge foundry and logic, and advanced packaging. The company now expects advanced-packaging revenue to grow more than 70% this calendar year, up from a previous forecast of more than 50%. Still, caution was already embedded in the setup: the stock had more than doubled in 2026, and William Blair had assigned a Market Perform rating, citing valuation near 29 times its 2027 earnings estimate. Options traders had priced a roughly 7% post-earnings move, with a bearish put-to-call ratio of 1.4x on short-dated contracts.
GAAP EPS was $3.17 after a $220 million unrealized investment loss weighed on reported profit, though adjusted results still beat expectations. Wall Street analysts remain broadly constructive: UBS raised its price target to $705 from $570, Bank of America's Vivek Arya described sector weakness as a "summer reset, not a fundamental reversal," and CFRA's Brooks Idlet called the quarter solid. The broader consensus price target of $667.46 implies 21.8% upside, but the post-earnings decline underscored that great results were no longer enough to satisfy elevated AI-equipment expectations.
