AI chip expansion wave shows no sign of slowing, Applied Materials (AMAT.US) Q1 revenue guidance beats expectations

Applied Materials (AMAT.US) reported fourth-quarter and full-year results for fiscal 2026 after the bell on Thursday. The results showed Q4 revenue of $10.41 billion, up about 53% year over year, above the market expectation of about $10.3 billion; adjusted earnings per share were $4.16, up about 92% year over year, above the expected $4.06. Driven by AI chip capacity expansion, revenue in the core Semiconductor Systems business reached $8 billion in Q4, up 64% year over year. The company forecast first-quarter revenue for fiscal 2027 above Wall Street expectations, betting that strong demand for advanced AI chips will continue to drive its spending on semiconductor manufacturing equipment. For the full year, company revenue was $34.45 billion, up 21% year over year, a record high; GAAP earnings per share were $12.62 and non-GAAP earnings per share were $12.89 (up 37% year over year), both records; operating cash flow was $8.87 billion, and the company returned $4.75 billion to shareholders for the year ($3.18 billion in buybacks and $1.57 billion in dividends). On guidance, the company expects first-quarter fiscal 2027 revenue of about $11.1 billion (plus or minus $500 million), above the analyst average estimate of about $10.89 billion; adjusted earnings per share of about $4.35 (plus or minus $0.20), also above expectations. The company judges that strong demand for advanced AI chips will continue to drive investment in semiconductor manufacturing equipment, and the stock rose about 3% in after-hours trading at one point. CEO Gary Dickerson said in a statement that fiscal 2026 results were record-setting, and the Semiconductor Systems business is expected to achieve more than 40% growth across the entire 2026 calendar year, "AI continues to drive incremental demand for semiconductors." At the end of October, Dickerson had clearly stated plans to double the company's revenue over the next few years without expanding headcount proportionally, relying mainly on AI tools to improve R&D and quality-control efficiency, and launching a $5 billion EPIC R&D center in Silicon Valley to accelerate next-generation chip development; however, the U.S. expansion of export controls on China had led the company to expect a loss of about $600 million in revenue for fiscal 2026, and the China market remains its biggest policy variable.