Applied Materials (AMAT) Stock Surges 14% After Beating Q1 Earnings on AI Demand

TLDR

• Applied Materials (AMAT) stock surged 13-14% in after-hours trading Thursday after reporting fiscal Q1 earnings that beat Wall Street expectations.
• The company posted adjusted earnings of $2.38 per share on revenue of $7.01 billion, beating analyst estimates of $2.21 per share and $6.87 billion.
• CEO Gary Dickerson expects the semiconductor business to grow over 20% in 2026, with global semiconductor industry revenues potentially hitting $1 trillion this year.
• For the current quarter, Applied Materials forecasts revenue of $7.15 billion to $8.15 billion and adjusted earnings of $2.44 to $2.84 per share, well above Wall Street estimates.
• The company’s profit jumped 70% to $2.03 billion in the January quarter compared to $1.19 billion a year earlier, driven by soaring AI demand.

Applied Materials delivered a knockout quarter Thursday. The semiconductor equipment maker crushed Wall Street expectations and sent shares soaring more than 13% in after-hours trading.

The company reported adjusted earnings of $2.38 per share on revenue of $7.01 billion for its fiscal first quarter ending in January. Analysts had expected $2.21 per share on revenue of $6.87 billion.

Profit jumped 70% to $2.03 billion from $1.19 billion in the same quarter last year. The stock had already gained 78% over the past 12 months through Thursday’s close.

Applied Materials, Inc., AMAT

CEO Gary Dickerson painted an aggressive growth picture on Thursday’s earnings call. He expects the semiconductor business to expand more than 20% this calendar year.

The company moved up its timeline for when global semiconductor revenues could hit $1 trillion. Dickerson now expects that milestone in 2026, a year earlier than his previous forecast of 2027.

AI developers need higher-performing and more energy-efficient chips. That’s driving growth rates for memory and packaging, Dickerson said.

Strong Guidance Tops Expectations

Applied Materials gave bullish guidance for the current quarter. The company expects revenue between $7.15 billion and $8.15 billion with adjusted earnings of $2.44 to $2.84 per share.

Wall Street had forecast $7.01 billion in revenue and $2.28 per share in adjusted earnings. The guidance represents a clear beat on both metrics.

Demand will likely be weighted toward the second half of 2026, according to Dickerson. The company is preparing for that surge.

Applied Materials has nearly doubled its system manufacturing capability. Chief Financial Officer Brice Hill said the company also increased inventories to keep up with demand.

Long-Term Growth Catalyst

KeyBanc analyst Steve Barger raised his price target on Applied Materials to $450 from $380. He maintained an Overweight rating on the stock.

The strong outlook mirrors messages from fellow chip equipment makers ASML Holding and Lam Research. The rise of AI is creating a boom across the entire sector.

Dickerson said major customers are providing increased longer-term visibility. They want to ensure Applied Materials has operational capacity and service support ready for their ramps.

Applied Materials shares had nearly doubled in the 12 months through Thursday’s close. The after-hours jump Thursday suggests the rally has more room to run.

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