Applied Materials Just Had Its Best Quarter Ever — and It Thinks the Next One Will Be Even Better
Applied Materials, a company that makes the machines used to build computer chips, reported revenue of $9.12 billion for its third quarter on August 13, 2026. That was up 25 percent from the same period a year earlier and set a new company record (Applied Materials Investor Relations). Gross margin — the percentage of revenue the company keeps after paying the direct costs of making its products — was 50.3 percent.
The turnaround has been fast. In the first quarter of fiscal 2026, revenue was $7.01 billion, down 2 percent year over year (Applied Materials Investor Relations). By the second quarter, revenue climbed to $7.91 billion, up 11 percent (Applied Materials Investor Relations). The third quarter pushed the company past $9 billion for the first time.
For context, the entire previous fiscal year brought in a record $28.37 billion, up 4 percent, reported on November 13, 2025 (Applied Materials Investor Relations). This single quarter's $9.12 billion equals about 32 percent of that full-year total.
Applied Materials also forecast its fourth quarter revenue at roughly $10.25 billion, give or take $500 million (Reuters). That is well above the $9.54 billion that analysts on average were expecting (Investing.com).
The company credited part of its momentum to advanced packaging — technology that combines multiple chip components into one package to make chips faster and more efficient. Applied Materials now expects its packaging revenue to grow more than 70 percent in calendar year 2026, up from an earlier forecast of over 50 percent (Reuters).
The broader context here is that going from a 2 percent decline to 25 percent growth in just two quarters means chipmakers are buying equipment at a much faster pace. The gross margin rising from 49.0 percent to 50.3 percent over the same stretch suggests customers are buying more expensive, higher-end machines, which typically happens when the industry is upgrading to build smaller, more advanced chips.
The gap between Applied Materials' fourth quarter forecast and what analysts expected is about $710 million. When a major equipment maker guides that far above the consensus, it usually means analysts have not fully caught up to what customers are actually ordering, especially in advanced packaging, where timelines are hard to track from the outside.
The raised packaging growth forecast also tells us something about the broader chip industry. As it gets harder and more expensive to shrink individual transistors, companies are instead combining multiple chip pieces into one package to boost performance. Applied Materials is seeing that shift show up directly in its orders.
The number to watch in the next report will be whether the gross margin stays above 50 percent at the $10.25 billion revenue level. Holding that margin while growing revenue would confirm that the company's profits are scaling efficiently and that demand for advanced chipmaking tools has staying power. The fourth quarter report, announced for August 13, 2026, has already occurred, and the market's reaction will be parsed in the coming sessions. The numbers tell their own story: demand for semiconductor manufacturing equipment is accelerating faster than analysts' models predicted.
