Applied Materials Q2 Beats Estimates; AI Demand Drives Strong Guidance but Market Cautious

What happened

Applied Materials reported Q2 CY2026 revenue of $9.12 billion, up 24.8% year on year and above analyst estimates of $9.04 billion. Adjusted EPS was $3.50, beating estimates of $3.39. Operating margin expanded to 33.7% from 30.6%. For Q3, the company guided revenue to $10.25 billion and adjusted EPS to $4.02, both above consensus. Management attributed strength to AI-driven demand for leading-edge logic and DRAM, as well as advanced packaging and services. CEO Gary Dickerson noted customers are finding ways to address clean room constraints and increase tool demand.

Why it matters

Management emphasized unprecedented visibility into future orders, with major customers providing rolling eight-quarter forecasts and signaling multi-year growth. The company expects strong contributions from advanced packaging, DRAM, and services, and is scaling manufacturing capacity through 2027 and beyond. Despite the strong headline growth, the market responded negatively.