AMAT delivered a strong FY26 result overnight, with solid growth in both revenue and earnings. The result was accompanied by an upbeat quarterly forecast, with management signalling that demand across the semiconductor equipment market remains robust. Despite the beat, the stock traded down amid volatility across AI-related stocks, notably, NVIDIA’s unexpected leadership transition which has added an additional layer of noise.
Key details:
- FY26 revenue rose 21% to a record US$34.45bn, while non-GAAP EPS increased 37% to US$12.89.
- Q4 revenue increased 53% to US$10.41bn, ahead of the US$10.30bn consensus estimate.
- Q4 non-GAAP EPS rose 92% to US$4.16, beating the US$4.06 expected by the market.
- Non-GAAP gross margin expanded 250 basis points year-on-year to 50.6%.
- Q1 FY27 revenue guidance of approximately US$11.1bn was ahead of the US$10.89bn consensus, while EPS guidance of US$4.35 also exceeded the US$4.24 estimate.
- Management expects its Semiconductor Systems business to grow by more than 40% in calendar 2026.
MM’s view: There are legitimate concerns around valuations, regulatory constraints and potential project delays as power and infrastructure requirements increase, particularly following the shift in power to Democrats in Congress and the Senate. We expect further volatility as the market becomes more selective about which companies can deliver sustainable returns from AI investment. However, we believe the broader semiconductor buildout remains intact, with demand for advanced chips and leading-edge manufacturing continuing to support equipment spending.
- AMAT is well positioned across the AI supply chain, and this result and forward guidance gives us confidence the story still has plenty of runway
MM remains long and bullish AMAT
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