Dive Brief:
- Applied Materials reported $7.01 billion in Q1 revenue, above the midpoint of its guided range, citing increased demand for leading-edge logic, high-bandwidth memory and advanced packaging.
- The semiconductor systems segment achieved record DRAM revenue, the company said in a press release.
- Applied Materials is planning to launch more than a dozen new products this year, including three for advanced logic and DRAM.
Dive Insight:
President and CEO Gary Dickerson credited AI-driven demand for Applied Materials’ Q1 performance and said on a Feb. 12 earnings call that global semiconductor industry revenues could reach $1 trillion in 2026, several years earlier than previously predicted. He expects the company’s own semiconductor business to grow by more than 20% in 2026.
“Applied Materials delivered strong results in our fiscal first quarter, fueled by the acceleration of industry investments in AI computing,” he said. “This need for higher performance and more energy-efficient AI computing is reshaping semiconductor industry investments.”
Senior Vice President and CFO Brice Hill added that the company has focused on increasing capacity to meet customer demand. “Over the past several years, we have nearly doubled our system manufacturing capability, strengthened our supply chain and increased our inventories in preparation for market growth,” he said.
The bulk of Applied Materials’ Q1 revenue came from the semiconductor systems segment at $5.14 billion. Of that, “foundry, logic, and other” accounted for 62%, followed by DRAM at 34% and flash memory at 4%.
The Applied Global Services segment earned $1.56 billion in Q1 revenue, while a segment labeled “other” earned $312 million.
The company reported generating $1.69 billion in cash from operations and distributing $702 million to shareholders through $337 million in share repurchases and $365 million in dividends. Gross margin was 49%, while operating income was $1.83 billion, or 26.1% of net revenue, on a GAAP basis.
It projects total Q2 revenue of $7.65 billion, plus or minus $500 million.
During the earnings call, speakers focused heavily on accelerating demand for computer chips to power AI infrastructure.
“AI is at a tipping point where improvements in performance and cost translate into real-world applications that deliver meaningful productivity gains and return on investment for users,” Dickerson said. “The race to build out AI infrastructure is driving unprecedented spending on semiconductors, semiconductor manufacturing capacity, and research and development.”
Applied Materials previously reported record revenue during its 2025 fiscal year of $28.37 billion, up 4% year over year.
