Analyst(s): Brenden Burke
Publication Date: February 17, 2026
Applied Materials’ Q1 FY 2026 results highlight a stronger AI-driven equipment cycle across leading-edge logic, high-bandwidth memory (HBM), and advanced packaging. Management’s commentary points to second-half weighting, capacity tightness at customers, and an expanded product pipeline that supports continued share gains into 2027.
What is Covered in This Article:
- Applied Materials’ Q1 FY 2026 financial results
- AI-led mix shift to logic, HBM, packaging
- Three new products targeting gate-all-around transistors
- Services scale with AIx and robotic automation
- Guidance and Final Thoughts
The News: Applied Materials (NASDAQ: AMAT) reported Q1 FY 2026 revenue of $7.0 billion, down 2% year-on-year (YoY), versus Wall Street consensus of $6.9 billion. Semiconductor Systems revenue was $5.1 billion (-8% YoY), Applied Global Services (AGS) revenue was $1.6 billion (+15% YoY), and Other revenue was $312 million (Q1 FY 2025: $216 million). Non-GAAP operating income was flat at $2.1 billion (30.0% margin; down 0.6 points YoY). Non-GAAP net income was $1.9 billion (-2% YoY) and non-GAAP diluted EPS was $2.38 (flat YoY).
“Applied Materials delivered strong results in our fiscal first quarter, fueled by the acceleration of industry investments in AI computing,” said Gary Dickerson, President and CEO. “The need for higher performance and more energy-efficient chips is driving high growth rates for leading-edge logic, high-bandwidth memory and advanced packaging…we expect to grow our semiconductor equipment business over 20 percent this calendar year.”
Applied Materials Q1 FY 2026: AI Demand Lifts Outlook
Analyst Take: Applied Materials’ setup is increasingly aligned with AI infrastructure buildouts, where leading-edge logic, HBM DRAM, and advanced packaging are receiving the bulk of capital intensity. Management expects its Semiconductor Systems business to grow more than 20% in calendar 2026, with demand weighted to the second half as cleanroom availability paces shipments. Record DRAM systems revenue and sustained AGS momentum underscore both near-term mix and longer-term installed-base leverage. With expanded co-innovation (EPIC) and a robust product pipeline across deposition, etch, modification, and eBeam, Applied is positioned to extend share through multiple technology inflections. The combination of strong visibility into 2026–2027 ramps and value-based pricing supports durable margins even as volumes rise.
AI Infrastructure Mix: Logic, HBM, and Advanced Packaging
Management links the growth outlook to AI infrastructure, citing leading-edge logic capacity adds alongside aggressive HBM expansions that require 3x–4x more DRAM wafer starts per delivered bit than standard DRAM. In Q1, the Semiconductor Systems segment included record DRAM revenue, reflecting tighter utilization and stronger pricing dynamics at customers that are prioritizing AI-related nodes. Advanced packaging is skewing toward HBM and 3D chiplet stacking, areas where Applied has a strong share in materials deposition and removal. Cleanroom availability is a gating factor, creating a second-half weighted demand profile and extending momentum into 2027. Applied expects to grow its semiconductor equipment business more than 20% in calendar 2026, supported by share gains across deposition, conductor etch, and eBeam. These dynamics suggest sustained mix tailwinds in AI-centric segments for the next several years.
Product Pipeline and Co‑Innovation: Viva, Sym3 Z Magnum, Spectral, and EPIC
At SEMICON Korea, Applied announced multiple new systems aimed at gate-all-around (GAA) transistors and advanced DRAM: Viva radical treatment for nanosheet surfaces, Sym3 Z Magnum angstrom-level conductor etch, and Spectral atomic layer deposition to reduce resistance in advanced logic. These products are already being adopted by multiple leading foundries to enable the energy-efficient performance needed for next-generation AI workloads. Management highlighted that cold-field emission (CFE) eBeam revenue is expected to double to more than $1.0 billion in calendar 2026. The company also launched its first EPIC co-development agreement with Samsung, designed to provide earlier access to Applied R&D and speed technology transfer to volume manufacturing. These initiatives give Applied earlier, multi-node visibility into customer roadmaps and strengthen value capture via design-ins and services. The breadth of inflection-focused innovation positions Applied to compound share through successive nodes.
Services and Smart Factory Leverage: AIx and Automation
AGS delivered record services revenue in Q1, supported by installed-base growth and customers’ faster ramps on complex nodes. Supporting this growth, Applied has connected more than 30,000 etch chambers to its AIx (Actionable Insight Accelerator) platform. The company has also automated major distribution centers with AI-enabled robotics. As customers scale high-mix AI nodes, demand for advanced services should continue to grow at double digits. The combination of installed-base expansion and AI-enabled service differentiation is a durable earnings lever.
Guidance and Final Thoughts
For Q2 FY 2026, Applied guides total revenue of $7.65 billion ± $0.5 billion and non-GAAP EPS of $2.64 ± $0.20; within this outlook, Semiconductor Systems is expected at approximately $5.8 billion, AGS at approximately $1.6 billion, and Other at approximately $250 million, with non-GAAP gross margin at approximately 49.3% and a tax rate around 11%. Management reiterated >20% calendar-year growth for the semi equipment business, with demand weighted to the second half and visibility extending into 2027 as more cleanrooms come online. Capacity readiness is a priority after nearly doubling system manufacturing capability and increasing inventories to meet build plans. The near-term setup favors leaders in GAA, HBM, and chiplet packaging, where Applied holds strong process positions across deposition, etch, modification, and eBeam. With value-based pricing and execution on cost, margin durability should accompany volume growth.
See the full press release on Applied Materials’ Q1 FY 2026 financial results on the company website.
Disclosure: Futurum is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum as a whole.
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Author Information
Brendan is Research Director, Semiconductors, Supply Chain, and Emerging Tech. He advises clients on strategic initiatives and leads the Futurum Semiconductors Practice. He is an experienced tech industry analyst who has guided tech leaders in identifying market opportunities spanning edge processors, generative AI applications, and hyperscale data centers.
Before joining Futurum, Brendan consulted with global AI leaders and served as a Senior Analyst in Emerging Technology Research at PitchBook. At PitchBook, he developed market intelligence tools for AI, highlighted by one of the industry’s most comprehensive AI semiconductor market landscapes encompassing both public and private companies. He has advised Fortune 100 tech giants, growth-stage innovators, global investors, and leading market research firms. Before PitchBook, he led research teams in tech investment banking and market research.
Brendan is based in Seattle, Washington. He has a Bachelor of Arts Degree from Amherst College.
