Applied Materials Beat Everything but Wall Street’s Expectations for Margins - MarketBeat

Applied Materials delivered a strong quarterly performance in Q3 2026, reporting record revenue of $9.12 billion and non-GAAP EPS of $3.50, surpassing analyst estimates. Despite this, the company's gr... Read original →

Applied Materials delivered a strong Q3 performance with record revenue and EPS, yet flat gross margins triggered investor concern. From a tech chain perspective, rising demand for AI chips, especially at 3nm and below with EUV lithography, is driving equipment orders, but increasing process complexity is compressing margins. Geopolitical factors, including U.S. export controls on China, are raising supply chain costs and forcing restructuring. Competitors like ASML and NVIDIA are intensifying competition in AI chip and manufacturing equipment, pressuring market share. Despite healthy backlog and new fab projects, the elevated P/E ratio (43.72) suggests caution among investors. Without margin improvement, long-term capital allocation may stall. Over the next 12-24 months, the semiconductor equipment sector is likely to enter a phase of volume growth with stable pricing, where cost control and technological advancement will determine competitive outcomes.