Applied Materials reported fiscal fourth‑quarter 2025 results that surpassed analyst expectations, delivering a GAAP net income of $1.9 billion and earnings per share of $2.38. Adjusted EPS rose to $2.17, beating the consensus estimate of $2.10–$2.11 by $0.06–$0.07, a 2.8%–3.3% beat. Total revenue reached $6.8 billion, slightly above the consensus range of $6.66–$6.70 billion, but represented a 3% year‑over‑year decline rather than an increase as originally reported.
The revenue decline was driven by a 3% drop in the Semiconductor Systems segment, which fell 8.1% YoY, and a 0.9% decline in Applied Global Services. In contrast, the Display segment surged 68.3% YoY, reflecting strong demand for high‑resolution displays. The company cited capacity digestion in China and non‑linear demand from leading‑edge customers as key factors behind the overall revenue contraction, underscoring the impact of geopolitical and supply‑chain headwinds on its China‑focused sales.
Gross margin expanded to 48.1% from 47.5% a year earlier, a 60‑basis‑point gain driven by pricing power in high‑margin AI‑related equipment and a favorable product mix. However, the non‑GAAP operating margin contracted to 28.6% from 29.3%, a 70‑basis‑point decline attributed to higher raw‑material costs and a shift toward lower‑margin service revenue. The company’s cost‑control initiatives helped offset some margin pressure, but the mix shift and regional headwinds limited operating‑income growth.
For the first quarter of fiscal 2026, Applied Materials guided revenue of $6.85 billion ±$0.5 billion and adjusted EPS of $1.98–$2.38. Management emphasized that demand is expected to accelerate in the second half of 2026, while acknowledging that the current quarter’s revenue dip is largely due to China‑related capacity digestion and trade restrictions. The guidance reflects confidence in a rebound driven by AI and advanced packaging demand, but also signals caution about near‑term growth.
CEO Gary Dickerson said the company “delivered its sixth consecutive year of growth in fiscal 2025” and highlighted its leadership in leading‑edge logic, DRAM, and advanced packaging. CFO Brice Hill noted that the organization is preparing operations and service teams for higher demand in the latter half of 2026, while also acknowledging a decline in revenue in Q4 driven by China capacity digestion and non‑linear customer demand.
Investor sentiment was tempered by concerns over the 3% revenue decline and the delayed timing of demand recovery. While the earnings beat and revenue beat were positive, the market focused on the weakening China revenue and the expectation that significant growth will not materialize until the second half of 2026, leading to a muted reaction to the results.
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