Applied Materials AMAT is set to report its second-quarter fiscal 2026 results on May 14, and investor attention is firmly focused on its surging semiconductor systems business that is driven by the AI market.
Applied Materials has been experiencing growing traction for its foundry, logic, dynamic random access memory (DRAM), flash memory and advanced packaging wafer fabrication equipment as a rising number of semiconductor chip manufacturing companies are producing high-quality chips used in AI and high-performance computing.
Click here to know how AMAT’s overall fiscal first-quarter results are likely to be.
AI-Driven Semiconductor Demand Likely to Have Lifted AMAT’s Topline Growth
Applied Materials is benefiting from strength in the Semiconductor Systems, owing to a rebound in the semiconductor industry, particularly in the foundry and logic space. In the previous quarter, AMAT’s Semiconductor Systems generated revenues of $5.14 billion, contributing 73.3% to total net revenues, proving to be a key growth engine.
Applied Materials, Inc. Price and EPS Surprise
Applied Materials, Inc. price-eps-surprise | Applied Materials, Inc. Quote
The high-margin semiconductor systems business helped AMAT to post a non-GAAP gross margin of 49.1%. This momentum is likely to have persisted in the to-be-reported quarter, driven by rising cloud spending, improving factory utilization and capacity that remains tight in leading-edge foundry/logic and DRAM.
Applied Materials expects its semiconductor equipment business to grow more than 20% in calendar year 2026, with demand weighted toward the second half of the year as cleanroom space and fab buildouts pace spending.
Traction in Display and Applied Global Services to Support AMAT
Applied Materials also expects annualized double-digit growth in Applied Global Services, supported by its Actionable Insights Accelerator platform, which now connects more than 30,000 chambers and has helped cut response times by about 30%.
On the product side, product launches in the second quarter, such as Viva Radical Treatment, Sym3 Z Magnum Etch and Spectral Molybdenum ALD, are targeted at key inflections in gate-all-around, DRAM and advanced packaging. The company also highlighted Samsung Electronics' joining its EPIC Center, a move that should deepen co-development efforts around next-generation semiconductor technologies.
With $13.5 billion in cash and investments, $6.6 billion in debt and $13.6 billion left on its buyback authorization, Applied Materials enters the AI buildout cycle with a strong balance sheet and plenty of capital flexibility.
Zacks Rank
AMAT carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks with the Favourable Combination
NVIDIA NVDA has an Earnings ESP of +0.24% and carries a Zacks Rank of 2 at present.
NVIDIA is slated to report first-quarter 2026 results on May 20. The Zacks Consensus Estimate for NVIDIA’s first-quarter earnings is pegged at $1.77 per share, up by a penny over the past 30 days, indicating a rise of 118.5% from the year-ago quarter’s reported figure.
AudioEye AEYE is scheduled to report first-quarter 2026 results on May 12. Currently, it has an Earnings ESP of +9.62% and carries a Zacks Rank of 3.
The Zacks Consensus Estimate for AudioEye’s first-quarter earnings is pegged at 17 cents per share, indicating a year-over-year increase of 13.3%. Earnings estimates for the quarter have been revised downward by a penny over the past 60 days. Shares of AudioEye have plunged 23.2% YTD.
Keysight Technologies, Inc. KEYS is scheduled to report second-quarter fiscal 2026 results on May 19. Currently, it has an Earnings ESP of +0.86% and sports a Zacks Rank of 1.
The Zacks Consensus Estimate for Keysight Technologies’ second-quarter earnings is pegged at $2.33 per share, suggesting a year-over-year jump of 37.1%. Earnings estimates for the quarter have been revised upward two cents over the past 30 days.
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