AMAT earnings analysis
What we found in AMAT's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Applied Materials delivered a strong fiscal Q3: revenue increased 25% year over year to $9.115 billion, gross margin reached 50.3%, operating margin reached 33.7%, and GAAP diluted EPS rose to $3.17 from $2.22. Semiconductor Systems and AGS both grew, led by leading-edge foundry and logic demand, DRAM transitions, services and spares. The main offsets are heightened export-control and China exposure, a $253 million BIS settlement, and increased receivables, inventory and capital spending; however, nine-month operating cash flow was $5.568 billion and management stated that available liquidity should satisfy requirements for the next 12 months.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue grew 25% and beat consensus
- Revenue was $9.115 billion, up $1.813 billion, or 25%, from $7.302 billion in the prior-year quarter. The result exceeded the $9.003 billion consensus estimate by approximately 1.2%.
- Margins expanded materially
- Gross margin expanded 1.5 percentage points to 50.3% from 48.8%, while operating margin increased 3.1 points to 33.7% from 30.6%. Management cited higher revenue, average selling prices, lower material and manufacturing costs, and favorable product mix.
- GAAP EPS and net income improved
- GAAP diluted EPS increased $0.95, or 43%, to $3.17 from $2.22, and net income rose $759 million to $2.538 billion from $1.779 billion. The effective tax rate declined to 12.7% from 30.6%, benefiting from the prior-year CAMT valuation allowance.
- Semiconductor Systems led growth
- Semiconductor Systems revenue rose 27% to $7.040 billion, with operating income up 45% to $2.657 billion and operating margin up 4.7 points to 37.7%. Growth reflected stronger leading-edge foundry and logic spending and increased DRAM technology-transition investment.
- AGS delivered profitable growth
- AGS revenue increased 22% to $1.781 billion, while operating income rose 34% to $536 million and operating margin increased 2.8 points to 30.1%. Management attributed the improvement primarily to higher long-term service agreement revenue, spares spending, and favorable customer and product mix.
- Cash generation funded investment
- Nine-month operating cash flow increased to $5.568 billion from $5.130 billion. Capital expenditures rose to $1.988 billion from $1.475 billion, implying nine-month cash flow after capex of approximately $3.580 billion and capex equal to approximately 35.7% of operating cash flow.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Export-control compliance remains material
- The company paid a $253 million BIS settlement during the second quarter related to China customer shipments and export-controls compliance. The settlement requires internal audits, training and reporting, and failure to comply could activate a suspended denial order after the three-year waiver period.
- China and trade exposure
- China represented $2.506 billion, or 28%, of quarterly revenue, while Asia Pacific represented $7.265 billion, or 80%. Management stated that additional export licensing requirements and tariffs could further restrict sales, increase costs, and reduce competitiveness.
- Working-capital and capacity risk
- Accounts receivable increased to $7.691 billion from $5.185 billion at October 26, 2025, inventories rose to $6.564 billion from $5.915 billion, and days sales outstanding increased to 77 days from 72 days. The company attributed the receivables increase to higher down-payment invoices and lower factoring, while supply-chain and demand-forecasting risks could create excess inventory or margin pressure.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $3.17
- Gross margin
- 50.3%
- Operating margin
- 33.7%
- Segment
- Semiconductor Systems: $7.040 billion revenue, up 27% year over year; 37.7% operating margin versus 33.0%.
- Segment
- Applied Global Services: $1.781 billion revenue, up 22% year over year; 30.1% operating margin versus 27.3%.
- Segment
- Other: $294 million revenue, up 7% year over year; $(118) million operating loss versus $(4) million.
What they said about what is next.
The 10-Q does not provide new numeric quarterly or annual guidance. Quantitative outlook was provided in the August 13, 2026 earnings release, including Q4 revenue of $10.250 billion plus or minus $500 million and non-GAAP diluted EPS of $4.02 plus or minus $0.20.
The filing reads better than the one before it.
What came before.
- 10-Q · May 21, 2026
- Applied Materials achieved impressive performance in Q2 2026, with revenue of $7.91 billion, marking an 11% increase year-over-year, and gross margins climbing to 49.9%. Diluted EPS significantly rose to $3.51,…
- 10-Q · February 19, 2026
- Applied Materials reported fiscal Q1 revenue of $7,012 million (down 2% YoY) and diluted EPS of $2.54 (up from $1.45 a year ago), beating consensus. Gross margin expanded slightly to 49.0% while operating margin…
- 10-K · December 12, 2025
- Applied Materials reported fiscal 2025 revenue of $28.368B, up 4% year-over-year, with gross margin expanding to 48.7% and operating margin to 29.2%. The business emphasizes RD&E-led product development for technology…
- 10-Q · August 21, 2025
- Applied Materials reported Q3 net revenue of $7,302 million, up 8% year-over-year, with gross margin expanding to 48.8% (up 1.5 points) and operating margin to 30.6% (up 1.9 points). GAAP diluted EPS was $2.22 (up $0.17…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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