Applied Materials (AMAT) Q4 2025 earnings summary

Executive summary

• Fiscal 2025 marked the sixth consecutive year of growth, with record revenue, gross margin, operating profit, and EPS, despite trade restrictions and an unfavorable market mix impacting growth rates.

• AI-driven demand is accelerating investment in advanced semiconductors and wafer fab equipment, positioning the company for another record year in 2026, especially in leading-edge foundry logic, DRAM, and advanced packaging.

• The company has strengthened its product portfolio and streamlined its organization, focusing on inflection-driven innovation and deep co-innovation with customers.

• Management is preparing for higher demand in the second half of calendar 2026, driven by AI adoption and advanced semiconductor investments.

Financial highlights

• Fiscal 2025 revenue grew 4% year-over-year to $28.4 billion, with growth across all segments; non-GAAP EPS was $9.42, up 9% year-over-year.

• Non-GAAP gross margin increased by 120 basis points to 48.8%, the highest in 25 years; operating income grew 8% to $8.56B.

• Free cash flow for FY25 was $5.7B, with $2.3B in capital spending, over half for the new EPIC Center.

• $6.3 billion was returned to shareholders via $1.4 billion in dividends (up 15% per share) and $4.9 billion in share repurchases, reducing shares outstanding by over 3%.

• Q4 revenue was $6.8B, down 3% year-over-year; non-GAAP EPS was $2.17, down 6% year-over-year.

Outlook and guidance

• Fiscal 2026 is expected to be another growth year, with revenue weighted toward the second half as AI-related investments ramp.

• Q1 2026 guidance: revenue of $6.85B ± $500M, non-GAAP EPS of $2.18 ± $0.20, gross margin ~48.4%, and operating expenses ~$1.33B.

• Wafer fab equipment spending is projected to accelerate in the second half of 2026, with a favorable mix for the company.

• Gross margins are expected to remain stable until volumes ramp in the second half, with further improvements anticipated from pricing and cost initiatives.