Applied Materials reported fiscal fourth-quarter 2026 results on Nov 12, 2026 that exceeded consensus across the major headlines, yet the stock declined in the following session. As of Nov 13, 2:53 PM EST the shares traded at $367.76, down 3.46% from the prior close after an earlier after-hours pop faded. Over one month the shares are lower by 20.8% and over three months by 31.2%. The stock remains well below its 52-week high of $739.67 but is still up 64.7% over the trailing 12 months.
Key results for the quarter ended Oct 25, 2026 included earnings per share of $4.16 versus consensus of $4.06, revenue of $10.41 billion versus $10.30 billion expected, and a gross margin of 50.4%. Applied Materials trades at roughly $367.76 with a market capitalization near $293.5 billion.
What the numbers show
- Top-line strength and AI-driven demand: Revenue reached a record $10.4 billion for the quarter. Full-year fiscal 2026 revenue rose 21% to $34.4 billion while non-GAAP EPS increased 37% to $12.89. Management attributed growth to activity in leading-edge logic, DRAM and advanced packaging, with a material contribution tied to high-bandwidth memory-related work.
- Guidance versus consensus: For Q1 the company guided to $11.1 billion in revenue and a $4.35 EPS midpoint. Street consensus stood at $10.83 billion and $4.23 EPS, so the company’s own guide was above the prevailing analyst estimates.
- Expanding margins: Gross margins have risen from 48.0% to 50.4% over the last four quarters. Management signaled expectations for further margin improvement in 2027 driven by a richer product mix and services revenue.
- China exposure: The chief financial officer estimated that China would account for less than 25% of 2027 shipments and said Applied Materials is taking share there, particularly around the 28-nanometer node.
Questions answered by the report
- Is AI demand real? Management’s results indicate yes. The record revenue and the full-year growth figures support the view that AI-related demand is a significant driver.
- Is guidance below consensus? No. The Q1 guide sits above consensus, reversing the preview concern that a below-consensus guide could be the larger risk.
- Are margins still expanding? Yes. The gross margin progression in the last year and management’s commentary point to continued margin expansion into 2027.
- How large is China in the business mix? Management expects China to grow more slowly than AI-enabled markets and placed China at under 25% of forecasted 2027 shipments.
Outstanding questions and constraints
Several issues remain unresolved despite the beat and higher guide.
- Supply constraints: Management said that parts of the supply chain remain tight and that available clean-room space is limiting industry growth. These capacity and component limitations have the potential to cap shipments even if order trends remain strong.
- Ramp and margin pressure: Increasing output requires hiring and training, which could introduce near-term cost pressures and weigh on margins as the company scales production.
- Industry forecast absence: On Oct 13 the company declined to provide a wafer-fab-equipment forecast, an event that coincided with a roughly 7.5% intraday decline in the stock. Peers have been more willing to provide topline industry estimates; for example, Lam guided to a WFE market above $200 billion for 2027 and Goldman modeled $218 billion.
- Valuation gap: A fair-value model in the report places fair value at $317.52, which implies the stock was trading about 13.7% above that fair value level as of Nov 13, 2026, 2:53 PM EST. The trailing price-to-earnings ratio was 28.9x as of Oct 31, 2026, while analyst price targets imply 65.4% upside, creating a substantial divergence between the model and Street expectations.
Near-term catalysts to watch
- Q1 FY2027 earnings: The next quarterly report is tentatively scheduled for Feb 18, 2027. Consensus expectations for Q1 are $4.23 EPS on $10.83 billion in revenue; Applied Materials’ guide implies the effective bar is $4.35 and $11.1 billion.
- Estimate trajectory: Consensus for fiscal 2027 EPS is $18.77, which would represent 46% growth versus fiscal 2026. Analyst estimate revisions could be the mechanism that narrows the gap between the fair-value model and Street targets; estimates rose 1.3% over the prior 90 days.
- Export control policy and China dynamics: Post-election concerns about tighter chip export rules contributed to the late-October share-price slide. Beijing has publicly pushed back on such moves. Any policy change would directly influence the company’s China shipment mix.
- Peer WFE commentary: Remarks from industry peers including Lam, KLA and ASML and external forecasts such as Goldman’s $218 billion WFE estimate for 2027 will provide additional context for the demand outlook.
- Capacity expansion timing: Citi has argued that substantially increasing manufacturing capacity should relieve supply-side constraints. The market will be watching delivery timelines and backlog reduction as indicators of whether capacity additions ease the current limitations.
- Technical price levels: From a price-action perspective, a move below the $352.23 intraday low would likely extend the recent selloff, while a recovery above the $381.22 intraday high reached on Nov 13 would be interpreted as a sign of stabilization.
Bottom line
The quarter delivered strong operational results and a guide that outpaced consensus, underlining that demand is not the central worry. The market debate centers on timing: whether supply constraints, ramp costs and China exposure will restrict near-term revenue recognition and whether the valuation premium over the fair-value model is justified. The bull case emphasizes record margins and an expected 46% year-over-year EPS gain for fiscal 2027. The bear case focuses on the premium to the model and the practical limits on shipping capacity.