Applied Materials (AMAT) Q2 2026 earnings summary

Executive summary

• Achieved record quarterly revenue of $7.91 billion, up 11% year-over-year, with the highest gross margin in over 25 years, driven by strong demand in semiconductor equipment, AI infrastructure build-out, and leadership in foundry logic, DRAM, and advanced packaging.

• AI adoption is accelerating globally, fueling demand for semiconductors and equipment, with customers signaling strong growth into 2027 and over 35,000 internal AI users optimizing operations.

• Announced new products, partnerships, and acquisitions to strengthen technology leadership, including Trillium ALD, Precision PECVD, and intent to acquire NEXX.

• EPIC Center and co-innovation platform launched to accelerate technology commercialization and deepen customer partnerships, with major industry and academic partners.

• Resolved a significant export controls compliance matter with a $253 million legal settlement with the U.S. Commerce Department.

Financial highlights

• Q2/FQ2'26 revenue reached $7.91 billion, up 13% sequentially and 11% year-over-year.

• Non-GAAP gross margin was 50%, up 80 basis points year-over-year; GAAP gross margin was 49.9%.

• Non-GAAP operating margin at 32.1%; GAAP operating margin at 31.9%.

• Record non-GAAP EPS of $2.86, up 20% year-over-year; GAAP EPS was $3.51, up 33% year-over-year.

• Free cash flow was $210 million; $765 million returned to shareholders via dividends and buybacks.

Outlook and guidance

• Q3 FY26 revenue guidance: $8.95 billion ±$500 million; non-GAAP EPS: $3.36 ±$0.20.

• Non-GAAP gross margin expected at 50.1%; non-GAAP tax rate modeled at 11% for Q3.

• Semiconductor equipment business expected to grow over 30% in 2026; similar strong growth anticipated into 2027 and beyond.

• AGS annual growth rate outlook raised to mid-teens, with higher growth expected this year due to increased utilization and new fabs.

• Management expects continued quarterly dividends and ongoing share repurchases, with $13.2 billion remaining under the repurchase program.