Applied Materials Posts Record Q3 Revenue and Issues Guidance Above Estimates on AI Demand

Applied Materials reported record third-quarter revenue of $9.12 billion, topping the $9.02 billion analyst estimate and rising 25% year over year. Adjusted earnings per share came in at $3.50, above the $3.39-$3.42 consensus estimate and up 41% from a year earlier. Non-GAAP operating income reached $3.10 billion versus the $3.03 billion estimate, while non-GAAP free cash flow surged to $2.33 billion, well ahead of the $1.52 billion forecast and up 14% year over year.

Semiconductor systems revenue, the company's core segment, hit $7.04 billion against a $6.95 billion expectation. Applied Materials attributed the strength to continued AI-driven demand for semiconductor manufacturing equipment, which the company described as unprecedented. For the fourth quarter, the company guided revenue of $9.75 billion to $10.75 billion, with a midpoint of $10.25 billion that exceeds the $9.62 billion analyst consensus.

Shares initially slid after the report, according to one source, though the results and outlook broadly beat estimates across key metrics.