Applied Materials reported a record $9.1 billion in revenue for the third quarter of fiscal 2026, marking a 25% year-over-year increase driven by sustained demand for artificial intelligence infrastructure. The semiconductor equipment maker guided its fourth-quarter revenue to $10.25 billion, a projected 51% rise, as customers continue to expand capacity to meet AI workloads.
The company manufactures the deposition, etch, and inspection tools required to build microscopic circuit layers on chips. These machines are essential for memory makers and leading-edge foundries before any chip can be shipped. Applied Materials has cycled through smartphone silicon, cloud data center expansion, and now AI infrastructure over the past decade, though equipment spending volatility has historically impacted its stock performance.
Investors who held the stock through earlier years of slower growth saw significant gains as AI demand outpaced chip supply. The stock traded at $123 in October 2021 and reached $208.77 four years later before the recent re-rating. Over the past decade, the company’s shares outperformed the S&P 500 at one-year, five-year, and ten-year horizons. A buyer entering in 2021 endured four years of modest progress before the AI-driven surge delivered most of the value in a single year.
Recent performance has been volatile. The stock fell 11.95% in the week prior to the report, with a 52-week range spanning from $202.28 to $738.88. Despite this fluctuation, the quarterly dividend has increased from $0.10 in 2016 to $0.53. Margins have expanded for 13 consecutive quarters, and the forward P/E ratio stands at 23.
Bullish sentiment relies on AI keeping fabrication plants running at full capacity. Customers are providing eight-quarter rolling forecasts, with some discussions extending to 2030. However, risks remain regarding exposure to potential downturns. China accounts for 26% of Semiconductor Systems plus services revenue, down from 35% previously due to export controls. The company paid a $253 million settlement with the Commerce Department’s Bureau of Industry and Security in the first quarter of fiscal 2026.
The trailing P/E ratio is 43, which leaves limited margin if chipmakers pause spending. DRAM revenue, including high-bandwidth memory packaging, grew 52% in the third quarter. While equipment is only one segment of the broader AI expansion, Applied Materials’ position as a supplier of essential manufacturing tools has positioned it to benefit from continued data center buildouts.