Applied Materials, a U.S. semiconductor equipment company, posted record quarterly revenue and operating profit on the back of increased investment in artificial intelligence (AI) chips.
Applied Materials said on Aug. 14 that revenue for the third quarter of fiscal 2026 (May–July) rose 25% from a year earlier to $9.12 billion (about 12.89 trillion won). Operating profit increased about 38% to $3.08 billion (about 4.35 trillion won). Both revenue and operating profit were the highest ever on a quarterly basis.
In the same period a year earlier, revenue was $7.302 billion (about 10.32 trillion won) and operating profit was $2.233 billion (about 3.16 trillion won). The operating margin rose 3.1 percentage points, from 30.6% to 33.7%. The gross margin also increased 1.5 percentage points, from 48.8% to 50.3%.
Net profit increased 43% year over year to $2.538 billion (about 3.59 trillion won). Diluted earnings per share (EPS) rose 43% to $3.17. Excluding nonrecurring items such as mergers and acquisitions, non-GAAP operating profit was $3.1 billion (about 4.38 trillion won), and earnings per share were $3.50.
Growth was led by its core semiconductor equipment business. Revenue in the semiconductor systems institutional sector was $7.04 billion (about 9.95 trillion won), up about 27% from $5.564 billion (about 7.87 trillion won) a year earlier. Operating profit in this institutional sector increased 45% to $2.657 billion (about 3.76 trillion won). The operating margin rose from 33.0% to 37.7%.
Within semiconductor systems institutional sector revenue, foundry/logic and other products accounted for 67%. The DRAM share rose to 26% from 22% a year earlier, while the flash memory share fell to 7% from 9%. The company expects revenue growth to continue in the second half, centered on DRAM, cutting-edge foundry/logic, and advanced packaging.
Revenue in the Applied Global Services institutional sector, which handles equipment maintenance and repair, also increased about 22% year over year to $1.781 billion (about 2.52 trillion won). Operating profit rose 34% to $536 million (about 760 billion won).
By region, revenue from Korea increased 31% to $1.521 billion (about 2.15 trillion won) from $1.16 billion a year earlier. Korea's share of total revenue also rose from 16% to 17%. Taiwan revenue was $2.025 billion (about 2.86 trillion won), accounting for 22% of the total, and China accounted for 28% at $2.506 billion (about 3.54 trillion won).
Applied Materials expects semiconductor investment to continue as AI spreads and further raised its revenue outlook for the semiconductor systems institutional sector this year. With improving visibility into customer demand, it projected that growth will continue in 2027. It is also investing to expand production capacity to meet demand expected through the late 2020s.
The company forecast fourth-quarter fiscal 2026 revenue at $9.75 billion to $10.75 billion (about 13.78 trillion to 15.2 trillion won). The non-GAAP earnings-per-share outlook is $3.82 to $4.22.
Gary Dickerson, chairman and chief executive officer (CEO) of Applied Materials, said, "The rapid global spread of AI is driving unprecedented demand for Applied's materials engineering solutions," and added, "With improved visibility into demand confirmed by customers, we expect solid growth to continue in 2027."