Applied Materials
Applied Materials makes the machines that etch, deposit, and inspect every advanced chip.
On the record
Checkpoint: Q3 FY2026 earnings report, testing the above-30% equipment growth guidance
The call
Applied Materials is riding the AI capex wave to record margins while quietly ceding ground to Lam Research and KLA underneath it.
Applied Materials sells specialized machines that chip factories use to build processors. The company is hard to replace because it has spent 58 years perfecting the science of how these machines work, chip factories have invested years training workers on AMAT equipment and switching to a competitor would be expensive and time-consuming, and the U.S. government tightly controls who can buy these machines, which locks customers in. Right now, demand for AI chips is booming and pushing equipment sales up more than 30 percent, which is good news for AMAT. The one thing that could hurt: if the AI chip boom slows down while competitors like Lam Research steal away AMAT's market share in specific product categories, the company's huge profits could shrink.
Why
01
AI pressure: None apparent. AI data-center buildout is feeding Applied Materials, not eating it; 2026 equipment growth guided above 30% on AI chip demand. Could AI do the core job? Unlikely.
02
Bigger players: Lam Research and KLA. Analyst tracking shows Applied Materials lost served-market share to Lam and KLA in 2025, masked so far by overall AI-driven demand growth. Could a giant copy it? No, they are blocked.
03
What protects it. Deep installed base across every leading fab, multi-year switching costs, and over 1,100 export licenses that new entrants cannot easily replicate.
What would change this call
Q3 FY2026 earnings (Aug 13, 2026) show segment share vs Lam/KLA and gross margin trend. Would confirm whether share loss is worsening or margins hold despite it.
Independent analyst share-tracking reports (e.g. The Information Network) for 2026 full year. Would show if Lam/KLA/ASML share gains versus AMAT continued or reversed.
China revenue figures in upcoming 10-Q/10-K filings after BIS May 2026 export guidance. Would reveal if export controls are cutting China revenue faster than expected.
Independent analyst share-tracking reports (e.g. The Information Network) for 2026 full year. Would show if Lam/KLA/ASML share gains versus AMAT continued or reversed.
China revenue figures in upcoming 10-Q/10-K filings after BIS May 2026 export guidance. Would reveal if export controls are cutting China revenue faster than expected.
Key numbers
- Q2 FY2026 gross margin hit 50.0%, highest in over 25 years
- Paid $252.5M to settle 56 export violations tied to China
- Lost equipment market share to Lam, KLA, ASML in 2025
Named risks
- Ceding share to Lam, KLA, ASML could compress margins if AI capex cycle cools.
- US-China export policy shifts, including June 2026 extraterritorial BIS rules, threaten China revenue exposure.
- Stock beta of 1.57 shows high sensitivity to swings in AI-capex sentiment.
- Recent $252.5M export violation settlement signals ongoing compliance exposure despite closure.
Rivals, as read in July 2026
| Rival | Direction | Evidence |
|---|---|---|
| Lam Research | gaining on | Gained served-market share vs AMAT in etch/deposition in 2025 per analyst (2026-05-10) |
| KLA Corporation | gaining on | Gained inspection/metrology market share vs AMAT in 2025 per analyst (2026-05-10) |
| ASML Holding | gaining on | Gained share in 2025 per analyst tracking; remains sole lithography leader (2026-05-10) |
| Tokyo Electron | contesting | Competes directly in etch and deposition tools amid AI-driven WFE growth in 2026 |
Questions people ask
- Is Applied Materials profitable in 2026?
- Yes. Applied Materials posted FY2025 revenue of $28.37B and net income of $7.0B (2025-10-26), then hit a record $7.91B in Q2 FY2026 revenue with a 50.0% non-GAAP gross margin, the highest in over 25 years, as of 2026-04-26.
- Who is Applied Materials' biggest competitor?
- Lam Research, KLA, ASML, and Tokyo Electron are its closest wafer-fab equipment rivals. An analyst report dated 2026-05-10 found Applied Materials lost served-available-market share to Lam, KLA, and ASML across key markets in 2025, even as total demand grew.
- Is Applied Materials laying off employees?
- No layoffs are indicated. Official FY2025 10-K filings show headcount at 36,500 as of 2025-10-26, up 2.24% year over year from 35,700, alongside record revenue and margin growth in early 2026.
- Could AI replace Applied Materials?
- No. Applied Materials makes physical semiconductor manufacturing equipment (etch, deposition, CMP, ion implant) that AI cannot substitute; instead AI accelerator demand is a tailwind, with management raising 2026 equipment growth guidance to over 30% as of 2026-05-14.
- Who owns Applied Materials?
- Applied Materials is a publicly traded company on NASDAQ (AMAT) with no controlling parent; Vanguard funds hold roughly 3.25% via one ETF as of 2026-03-13. CEO Gary E. Dickerson leads the company under Chairman Thomas J. Iannotti.
- Has Applied Materials faced legal trouble over China exports?
- Yes. On 2026-02-12, Applied Materials agreed to pay $252.5M to settle with the US Commerce Department's BIS over 56 export violations tied to 2020-2022 ion-implanter shipments to SMIC via South Korea; DOJ and SEC closed related probes without further action.
Timeline
- 2026-07-20Joins CuspAI's AI Materials Foundry alongside Nvidia, Meta, Samsung, Tokyo Electron, Lam Research
- 2026-07-07Unveils SENZ platform for AI smart glasses with GlobalFoundries, Qualcomm, EssilorLuxottica
- 2026-06-25Launches new DRAM and advanced packaging tools for AI chips
- 2026-05-14Raises 2026 semiconductor equipment growth outlook to over 30% on AI demand
- 2026-05-10Analyst report finds AMAT lost 2025 market share to Lam, KLA, ASML
- 2026-05-03Announces acquisition of ASMPT's NEXX advanced packaging business
- 2026-04-26Reports record Q2 FY2026 revenue of $7.91B, 50.0% gross margin
- 2026-02-12Settles export violations with US BIS for $252.5M over SMIC shipments
- 2025-10-26Closes FY2025 with $28.37B revenue and $7.0B net income
Revision history
20 July 2026
First assessed. Hard to displace. The text above is fixed as of this date and is not edited afterwards.
In the same band
Sources
- Applied Materials, Financial data (2026-07-20)
- Applied Materials sees quarterly revenue above estimates on sustained AI spending (2026-05-14)
- Applied Materials, Inc. (AMAT) Earnings Dates, Call Summary & Reports (2026-07-13)
- Applied Materials expects Q3 revenue of $8.95B... as it forecasts semiconductor equipment growth of more than (2026-05-14)
- Applied Materials (AMAT) Number of Employees 1990, 2025 (2026-07-08)
- Applied Materials Lost Share Across Key Semiconductor Equipment Markets in 2025 (2026-05-10)
- Applied Materials to pay $252.5M to settle export violations (2026-02-25)
- Applied Materials Broadens Advanced Packaging Portfolio with Acquisition of NEXX (2026-05-03)
- Applied Materials (AMAT) Unveils SENZ To Speed AI Smart Glasses Development (2026-07-07)
- CuspAI Launches 'AI Materials Foundry'... (2026-07-20)
- Applied Materials Market Cap Analysis (2026-07-14)