Applied Materials reported record quarterly revenue of $9.12 billion while expanding its manufacturing and R&D capacity in Singapore with a new $500 million campus as accelerating artificial intelligence infrastructure investment increases demand for advanced semiconductor manufacturing technology.
Fiscal third-quarter revenue increased 25% year-over-year from $7.30 billion to $9.12 billion. Applied Materials also reported record GAAP operating income of $3.08 billion, representing 33.7% of revenue, while GAAP diluted EPS increased 43% to $3.17.
Non-GAAP operating income reached a record $3.10 billion, or 34% of revenue, while non-GAAP diluted EPS increased 41% to a record $3.50. GAAP net income increased 43% year-over-year to $2.54 billion, and non-GAAP net income increased 41% to approximately $2.80 billion.
Cash generation also reached a quarterly record. Applied Materials generated $3.04 billion of cash from operations and returned $860 million to shareholders, including $440 million through share repurchases and $420 million through dividends.
Management attributed the accelerating growth to strong demand for materials engineering technologies as global adoption of AI drives investment in increasingly sophisticated chips. Applied Materials said the quarter included the highest sequential revenue growth in company history and raised its Semiconductor Systems revenue expectations for calendar 2026.
The company also expects the growth cycle to extend beyond the current year. Based on increasing demand visibility from customers, Applied Materials expects another strong growth year in 2027 and is making additional manufacturing capacity investments to support projected demand through the end of the decade.
One of those investments is a new $500 million Tampines Campus in Singapore. The facility more than doubles Applied Materials’ advanced cleanroom capacity in the country and expands both manufacturing and R&D operations as the company supports the global build-out of AI infrastructure.
The investment complements strong growth in Applied Materials’ Semiconductor Systems business. Segment revenue reached $7.04 billion during Q3, compared with $5.56 billion in the prior-year period. DRAM represented 26% of Semiconductor Systems revenue, up from 22% a year earlier, while foundry, logic and other applications accounted for 67%.
Applied Materials is also introducing technology aimed directly at AI-related memory and packaging requirements. The company launched six new chipmaking systems for DRAM and advanced packaging, including technologies designed for high-bandwidth memory, hybrid bonding, 3D chip stacking, copper interconnects and advanced metrology.
One of the systems, Producer Avila 2 PECVD, is designed to improve the mechanical stability of ultra-thin DRAM dies, enabling reliable stacking of 12, 16 and future higher-layer-count high-bandwidth memory designs. Other systems target wafer polishing, copper plating, transistor efficiency and defect analysis for advanced packaging and chiplet architectures.
Applied Materials has also achieved 13 consecutive quarters of year-over-year gross margin expansion. GAAP gross margin reached 50.3%, up from 48.8% a year earlier, while operating margin expanded to 33.7% from 30.6%. Management expects particularly strong second-half growth in DRAM, leading-edge foundry-logic and advanced packaging.
For the fiscal fourth quarter, Applied Materials expects approximately $10.25 billion of revenue, plus or minus $500 million. Non-GAAP diluted EPS is expected to reach approximately $4.02, plus or minus $0.20.
KEY QUOTES:
“Applied Materials delivered another record-breaking quarter, including the highest sequential revenue growth in the company’s history. As the rapid global adoption of AI drives unprecedented demand for our materials engineering solutions, we are further raising our Semiconductor Systems revenue expectations for calendar 2026 and are confident we will grow faster than the market this year. Based on the increased demand visibility we are receiving from our customers, we expect another strong growth year for Applied Materials in 2027.”
Gary Dickerson, President and CEO of Applied Materials
“Applied Materials achieved its 13th consecutive quarter of year-over-year gross margin expansion, demonstrating the increasing value we create by enabling better chips, systems and fab returns. We expect continued strong revenue growth in the second half of the calendar year, particularly in DRAM as well as leading-edge foundry-logic and advanced packaging. Looking further ahead, we are making additional manufacturing capacity investments to support projected demand through the end of the decade.”
Brice Hill, Senior Vice President and CFO of Applied Materials
