Applied Materials (NASDAQ: AMAT) reported fiscal fourth-quarter 2026 revenue of $10.41 billion, up 53% year over year, and non-GAAP earnings of $4.16 per diluted share, up 92%. The semiconductor-equipment supplier also projected $11.10 billion in revenue for fiscal Q1 2027, placing its outlook above the analyst average. For shareholders, the stronger story is not simply AI-related sales growth: higher margins and record free cash flow show how much of that demand is reaching profits and cash generation. Applied Materials reported the figures on November 12.
Applied Materials Q4 2026 earnings: the key numbers
The quarter ended October 25, 2026. The comparison below separates generally accepted accounting principles (GAAP) from adjusted, or non-GAAP, figures, because the two measures tell different stories about earnings growth.
| Metric | Fiscal Q4 2026 | Fiscal Q4 2025 | Change |
|---|---|---|---|
| Revenue | $10.409B | $6.800B | +53.1% |
| GAAP diluted EPS | $3.40 | $2.38 | +42.9% |
| Non-GAAP diluted EPS | $4.16 | $2.17 | +91.7% |
| GAAP gross margin | 50.4% | 48.0% | +240 basis points |
| Non-GAAP gross margin | 50.6% | 48.1% | +250 basis points |
| Non-GAAP operating margin | 35.3% | 28.6% | +670 basis points |
| Non-GAAP free cash flow | $2.616B | $2.043B | +28.0% |
Revenue exceeded the approximately $10.30 billion analyst estimate by $109 million, or 1.1%. Adjusted EPS topped a $4.05 estimate by $0.11, or 2.7%, using the published analyst estimate. The beat was positive but relatively modest; the much larger year-over-year growth reflects the scale of the manufacturing-equipment upcycle. The company’s financial release confirms that GAAP operating income reached $3.66 billion while adjusted operating income reached $3.68 billion.
Semiconductor Systems drove nearly 77% of quarterly sales
Semiconductor Systems generated $7.996 billion in fourth-quarter revenue, up from $4.879 billion a year earlier, or 63.9%. That business contributed approximately 76.8% of companywide revenue and accounted for most of the incremental sales. Applied Global Services, which supports installed equipment, rose 25.9% to $1.896 billion. The Other category, which includes Display, increased 24.6% to $517 million.
Within Semiconductor Systems, foundry and logic represented 58% of quarterly segment revenue, DRAM 33%, and flash memory 9%. Those are shares of the segment, not percentages of Applied Materials’ total revenue. The DRAM share increased from 28% a year earlier, indicating a heavier mix of memory-related demand as chipmakers invest in advanced manufacturing processes. The earnings presentation also cited record DRAM, advanced packaging, deposition, etch, chemical-mechanical planarization and process-control revenue.
The company changed its segment structure at the start of fiscal 2026 by moving its 200-millimeter equipment business into Semiconductor Systems. Prior-year segment figures were recast accordingly, making the year-over-year comparison consistent. For context on the different parts of AI chip spending, DualFinances previously examined the AMD versus Nvidia data-center revenue gap.
Profitability improved faster than revenue
Non-GAAP gross margin rose to 50.6%, 2.5 percentage points higher than a year ago. Management’s presentation attributed the gain to a more favorable product mix and higher pricing. More importantly, the non-GAAP operating margin advanced from 28.6% to 35.3%, a 6.7-percentage-point improvement. Adjusted operating expenses grew more slowly than revenue, reducing their share of sales.
That operating leverage is central to the shareholder case. It means a larger proportion of each incremental sales dollar reached operating profit as equipment volumes increased. The GAAP picture was positive as well: GAAP EPS grew 42.9% to $3.40, although that rate was well below the 91.7% growth in adjusted EPS. Investors should use the company’s reconciliations when comparing the two measures, rather than treating adjusted earnings as identical to statutory net income.
Record free cash flow supports buybacks and dividends
Applied Materials generated $3.30 billion in cash from operations and $2.616 billion of non-GAAP free cash flow during the fourth quarter. The reported free-cash-flow margin was approximately 25.1% of revenue, compared with operating profit margins that measure a different stage of profitability. Free cash flow grew 28.0% year over year, slower than revenue, a useful distinction for investors weighing earnings quality.
The company distributed approximately $2.42 billion to shareholders, including $2.00 billion of share repurchases and $421 million in dividends. These distributions were equivalent to roughly 92.5% of the quarter’s reported free cash flow. Buybacks can support per-share results over time, but the value created depends on the price paid and the company’s remaining investment requirements.
For the full fiscal year, free cash flow reached $6.196 billion on $34.446 billion in revenue, a margin of about 18.0%. Fiscal 2026 revenue increased 21.4% from $28.368 billion, while non-GAAP EPS rose from $9.42 to $12.89, a gain of 36.8%. The annual figures show a profitable expansion, not merely a single unusually strong quarter. The contrast with the funding-heavy AI infrastructure model is clear in our CoreWeave debt and cash-flow analysis.
Fiscal Q1 2027 guidance extends the growth trend
For the first quarter of fiscal 2027, management forecast revenue of $11.10 billion, plus or minus $500 million, implying a range of $10.60 billion to $11.60 billion. The midpoint would be 6.6% above fiscal Q4 revenue. Reuters reported an LSEG consensus of $10.89 billion, so the midpoint is about 1.9% higher than that benchmark.
The adjusted EPS forecast is $4.35, plus or minus $0.20, or $4.15 to $4.55 per share. The midpoint is approximately 4.6% above fiscal Q4 adjusted EPS. The company noted a $0.04-per-share anticipated tax benefit tied to intra-entity intangible-asset transfers in the guidance, which matters when assessing the quality of the projected increase.
CEO Gary Dickerson said the company was on track for more than 40% growth in its Semiconductor Systems business during calendar 2026. The company defines that calendar-year period as fiscal Q2 2026 through fiscal Q1 2027, so that projection should not be confused with the already reported full fiscal-year segment growth.
AI investment opportunities and the main risks for AMAT
Applied Materials sells tools and processes used by chip manufacturers rather than selling AI accelerators directly. This gives it exposure to investments in leading-edge logic, DRAM, complex packaging and other fabrication steps. Its new Silicon Valley EPIC Center, along with collaborations involving Intel, Kioxia, Besi and UCLA, is intended to bring materials research and commercial process development closer together. These partnerships may help the company participate in new manufacturing transitions, although their financial returns will unfold over time.
Three risks deserve particular attention: chipmakers can delay capital spending after periods of aggressive investment; international export rules can constrain sales or product access; and a less favorable mix or greater research spending could limit margin expansion. Demand from AI data centers is substantial, but it does not insulate the equipment market from cyclical order patterns. The broader market sensitivity to AI capital spending is evident in DualFinances’ Nebius and Nvidia sector selloff analysis.
What investors should watch next
The immediate checkpoint is Applied Materials’ fiscal Q1 2027 results, covering the quarter after October 25, 2026. The company had scheduled its fiscal Q4 earnings conference call for November 12 at 4:30 p.m. ET. The most useful updates will concern the mix of DRAM and advanced packaging orders, any changes to customer spending plans, whether gross margin can remain near 50%, and how much operating cash converts into free cash flow.
Valuation is the final test. Strong growth can support a premium multiple, but earnings quality, recurring services, capital returns and the durability of manufacturing investment matter more than a single quarterly beat. Without anchoring the analysis to an updated, verified market price, the results establish improving fundamentals but not a specific upside target for AMAT shares.
Bottom line: Applied Materials delivered a 53.1% quarterly revenue increase, nearly doubled adjusted earnings per share and generated $2.616 billion of free cash flow. The $11.10 billion next-quarter revenue outlook indicates momentum into fiscal 2027, while margin performance suggests the company is converting AI-related chipmaking demand into higher profitability. The next question is whether that operating leverage holds as customer capital-spending cycles evolve.
Published November 12, 2026, 4:22 p.m. ET. For informational purposes only; not investment advice.