Applied Materials (NASDAQ: AMAT) reported record fourth-quarter revenue of $10.41 billion, up 53 percent from a year earlier, as chipmakers kept spending on new factory equipment. Non-GAAP earnings reached $4.16 per share, up 92 percent year over year. Shares still slipped with the broader semiconductor group on Friday after the Thursday evening release.
The setup
The quarter, which ended October 25, 2026, capped a record fiscal year. Applied Materials booked $34.45 billion in revenue for fiscal 2026, up 21 percent, and produced roughly $10.1 billion in net income. Semiconductor Systems revenue climbed 64 percent to $8.0 billion, while the Applied Global Services segment rose to $1.90 billion.
Key numbers from the quarter
| Metric | Q4 fiscal 2026 | Change |
|---|---|---|
| Revenue | $10.41 billion | Up 53 percent |
| GAAP EPS | $3.40 | Up 43 percent |
| Non-GAAP EPS | $4.16 | Up 92 percent |
| Non-GAAP gross margin | 50.6 percent | Reported |
| Non-GAAP operating margin | 35.3 percent | Record level |
| Semiconductor Systems revenue | $8.0 billion | Up 64 percent |
| Applied Global Services revenue | $1.90 billion | Up 26 percent |
| Fiscal 2026 revenue | $34.45 billion | Up 21 percent |
Record cash returns
Applied Materials returned $2.42 billion to shareholders in the quarter, including $2.00 billion in share repurchases and $421 million in dividends. Free cash flow hit a record $2.6 billion. For the full fiscal year, the company distributed $4.7 billion, split between $3.2 billion in buybacks and $1.6 billion in dividends.
The dividend yields about half a percent at Friday’s closing price near $370.50, so income plays a supporting role in the return story. Buybacks have been the larger channel for returning capital.
Analyst reaction to the results
B. Riley Securities maintained a Buy rating on November 9 but cut its price target to $475 from $700. UBS holds a $695 target with a Buy rating, while Morgan Stanley reiterated an Equal-Weight rating at a $538 target on November 3. The average analyst price target sits near $620, well above Friday’s close.
Summit Insights took a more cautious view on November 13, downgrading the stock to Hold from Buy. Analyst Kinngai Chan argued that limited cleanroom space will cap tool installations and that 2027 budgets may favor lithography rival ASML. Chief Financial Officer Brice Hill acknowledged the constraint on the earnings call, calling cleanroom capacity “a gating factor.”
Chief Executive Officer Gary Dickerson countered that leading-edge foundry-logic, DRAM, and advanced packaging should be the fastest growing parts of wafer fab equipment in 2027. He also said Semiconductor Systems is on track to grow more than 40 percent in calendar 2026.
What to watch
- First quarter fiscal 2027 guidance of $11.10 billion in revenue, plus or minus $500 million, and non-GAAP EPS of $4.35, plus or minus $0.20
- Chip sector sentiment after a leadership change at Nvidia pressured equipment makers this week
- Customer capital spending plans for 2027, including how budgets split across equipment makers
- The stock’s path after a month in which shares lost about 20 percent
Bottom line
Applied Materials just posted the best quarter in its history and guided higher for the new fiscal year. The share decline reflects sector sentiment and valuation questions rather than the reported numbers. Income investors collect a modest yield near half a percent, while total return depends on the AI equipment cycle staying intact.
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