Applied Materials Q1 Earnings Beat Estimates, Revenues Fall Y/Y

Applied Materials AMAT reported first-quarter fiscal 2026 non-GAAP earnings of $2.38 per share, which beat the Zacks Consensus Estimate by 8.7%. AMAT’s first-quarter fiscal 2026 non-GAAP earnings remained flat from the year-ago quarter’s reported figure.

AMAT beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 5.2%.

AMAT reported revenues of $7.01 billion in the first quarter of fiscal 2026, surpassing the Zacks Consensus Estimate by 1.79%. The top line decreased 2.2% from the year-ago quarter.

This strong quarterly result pushed AMAT stock up 11.8% in Friday's pre-market session. AMAT stock has surged 112% in the past year.

AMAT’s Q1 Earnings in Detail

Segment-wise, Semiconductor Systems generated revenues of $5.14 billion, contributing 73.3% to total net revenues and declining 8.1% from the year-ago quarter.

Applied Global Services posted revenues of $1.56 billion (22.2% of total net revenues), which increased 15.2% year over year.

Other revenues totaled $312 million (4.4% of total revenues), up 44.4% year over year.

Revenues in the United States, Europe, Japan, Korea, Taiwan, Southeast Asia and China were $656 million, $221 million, $525 million, $1.46 billion, $1.72 billion, $335 million and $2.1 billion, contributing 9%, 3%, 7%, 21%, 25%, 5% and 30% to total net sales, respectively.

Year over year, revenues in Taiwan and Southeast Asia grew 45.6% and 17.1%, respectively, while revenues in Japan, Europe, China, Korea and the United States declined 2.8%, 33.0%, 6.6%, 12.5% and 28.5%, respectively.

AMAT’s Margins in Detail

The non-GAAP gross margin was 49.1%, expanding 20 basis points year over year. Non-GAAP operating expenses were $1.34 billion, up 1.7% year over year.

The non-GAAP operating margin came in at 30.0%, down 60 basis points from the year-ago quarter.

Balance Sheet & Cash Flow of AMAT

As of Jan. 25, 2026, cash and cash equivalents plus short-term investments were $8.51 billion, compared with $8.57 billion at the end of the prior quarter. Long-term debt was $6.45 billion at the end of the first quarter of fiscal 2026.

Applied Materials generated non-GAAP free cash flow of $1.04 billion. The company returned $702 million to shareholders, including $337 million in share repurchases and $365 million in dividends for the quarter.

AMAT Initiates Q2 Guidance

For the fiscal second quarter of 2026, Applied Materials expects net sales of $7.65 billion (+/- $500 million). The Zacks Consensus Estimate for the second quarter of fiscal 2026 is pegged at $7.03 billion, indicating a year-over-year decline of 1%.

Semiconductor Systems, Applied Global Services, and Display (reported under Corporate & Other) sales are anticipated to be $5.80 billion, $1.60 billion, and $250 million, respectively.

Applied Materials expects a non-GAAP gross margin of approximately 49.3% and non-GAAP operating expenses of around $1.42 billion. It projects a non-GAAP tax rate of roughly 11%.

Management expects non-GAAP earnings per share of $2.64 (+/- $0.20). The Zacks Consensus Estimate for second-quarter fiscal 2026 is pegged at $2.29, indicating a year-over-year rise of 2.1%.

Zacks Rank

AMAT carries a Zacks Rank #2 (Buy) at present.

Upcoming Releases

MKS MKSI sports a Zacks Rank #1 (Strong Buy). MKS shares have gained 133% in the past 12-month period. The company is scheduled to report its fourth-quarter 2025 results on Feb. 17, 2026. You can see the complete list of today’s Zacks #1 Rank stocks here.

Analog Devices ADI carries a Zacks Rank #2 at present. Analog Devices shares have surged 64.3% in the trailing 12-month period. Analog Devices is set to report its earnings on Feb. 18, 2026.

Applied Optoelectronics AAOI carries a Zacks Rank #2 at present. Applied Optoelectronics shares have surged 93.4% in the trailing 12-month period. Applied Optoelectronics is slated to report fourth-quarter 2025 results on Feb. 26.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research