Applied Materials, Inc. Q2 FY2026 Earnings Call

· Earnings call transcript and AI-powered summary

Applied Materials Q2 Fiscal 2026 Earnings Summary

Record Results Driven by AI Demand: Applied Materials reported record revenue and earnings in Q2 FY2026, with strong growth in leading-edge foundry logic, DRAM, and advanced packaging. The company highlighted accelerating AI adoption, including agentic AI applications, as a key driver for multiyear growth in wafer fab equipment (WFE) spending. Customers provided 8-quarter rolling forecasts, supporting visibility into 2027 and beyond.

Financial Highlights (Comparisons to Prior Periods)

  • Revenue: $7.91 billion, +13% sequentially (vs. Q1 FY2026) and +11% year-over-year (vs. Q2 FY2025).
  • Non-GAAP Gross Margin: 50.0%, +80 basis points YoY (vs. Q2 FY2025); highest in over 25 years. Continued expansion expected from portfolio enrichment and new products.
  • Non-GAAP Operating Margin: 32.1%, +140 basis points YoY (vs. Q2 FY2025).
  • Non-GAAP EPS: $2.86, +20% YoY (vs. Q2 FY2025).
  • Free Cash Flow: $210 million (after $635 million capex); $765 million returned to shareholders ($365M dividends, $400M buybacks). Quarterly dividend increased 15%.
  • China Revenue: 24% of Semiconductor Systems + AGS revenue; expected flat to slightly higher for calendar 2026.

Segment Performance

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Operator: Welcome to the Applied Materials Second Quarter Fiscal 2026 Earnings Call. [Operator Instructions] I would now like to turn the call over to Mike Sullivan, Corporate Vice President of Investor Relations. Please go ahead. Michael Sullivan: Good afternoon, everyone, and thank you for joining today's call. With me are Gary Dickerson, our President and CEO; and Brice Hill, our Chief Financial Officer. Before we begin, I'd like to remind you that today's call includes forward-looking statements which are subject to risks and uncertainties that could cause our actual results to differ. Information concerning these risks and uncertainties is discussed in our most recent Form 10-Q and other filings with the SEC. Today's call also includes non-GAAP financial measures. Reconciliations to GAAP measures can be found in today's earnings press release and in our quarterly earnings materials, which are available on our website at ir.appliedmaterials.com. In addition, any comments regarding calendar 2026 refer to Q2 of this fiscal year through Q1 of fiscal 2027, which will be a 14-week quarter. Next, I'll share some calendar items. I'm pleased to announce the second event in our 2026 Master Class series. We'll cover DRAM and advanced packaging on a live webcast on Thursday, June 25, at 9:00 a.m. Pacific Time. Next, I'd like to remind you about our two special events during SEMICON West. On Monday afternoon, October 12, we invite you to the unveiling of the new EPIC Center in Sunnyv

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