Applied Materials 2025 Q4 Earnings Beats Expectations with 9.6% Net Income Growth

Applied Materials (AMAT) reported fiscal 2025 Q4 earnings that exceeded expectations, with net income rising 9.6% year-over-year. Despite a 3.5% revenue decline, the company’s EPS surged 13.3%, and management provided in-line guidance for fiscal 2026. The stock faced post-earnings volatility, reflecting mixed market sentiment.

Revenue

Applied Materials’ Q4 revenue fell to $6.80 billion, a 3.5% decline from $7.04 billion in the prior year. The Semiconductor Systems segment generated $4.76 billion, down 8.1% year-over-year, while Applied Global Services contributed $1.63 billion, a 0.9% decrease. Display revenue surged 68.3% to $355 million, driven by advanced screen technologies. Corporate and Other segments reported a $269 million operating loss, contrasting with a $91 million profit in the Display unit.

Earnings/Net Income

Earnings per share (EPS) rose 13.3% to $2.17, outpacing the $2.11 consensus estimate. Net income increased to $1.90 billion, reflecting improved gross margins and cost management. The EPS growth underscores strong profitability, despite revenue headwinds.

Post-Earnings Price Action Review

The strategy of buying AMAT shares after revenue announcements and holding for 30 days yielded a 45.95% cumulative return over three years, with an annualized return of 14.24%. While 75% of quarters showed positive returns, volatility—such as a 10.82% loss in Q4 2022—highlighted sector risks. A 30-day hold period often preserved gains during market swings but occasionally locked in short-term declines. Earnings-driven price moves and semiconductor sector cycles significantly influenced performance.

CEO Commentary

CEO Gary Dickerson emphasized AI-driven growth in semiconductors and wafer fab equipment, despite challenges from trade restrictions. Recent product launches like Xtera and PROVision 10 target advanced packaging and logic markets. He expressed confidence in extending leadership in AI-enabled technologies through the EPIC platform and co-optimization strategies.

Guidance

CFO Brice Hill provided Q1 2026 guidance: revenue of $6.85 billion (±$500 million), non-GAAP EPS of $2.18 (±$0.20), and a 48.4% non-GAAP gross margin. Revenue growth is expected to accelerate in the second half of 2026, driven by leading-edge logic and DRAM demand. Capital spending remains elevated, but operating expenses are projected at $1.33 billion, with a 13% tax rate.

Additional News

Applied Materials announced a 15% increase in its quarterly cash dividend and a $10 billion share repurchase program, underscoring shareholder value initiatives. CEO Gary Dickerson purchased 50,000 shares in April, signaling long-term confidence. The company also expanded collaboration with BE Semiconductor Industries to advance hybrid bonding technology. Recent restructuring efforts, including a 1,400-position workforce reduction, aim to enhance productivity amid export restrictions impacting China revenue.

Image Description:

A graph showing Applied Materials’ Q4 2025 revenue and EPS compared to the prior year, highlighting the 9.6% net income growth.

Guidance & Outlook

Management anticipates fiscal 2026 growth, with demand for AI-driven semiconductor tools expected to outpace industry slowdowns. Strategic investments in R&D and capacity expansion position AMAT to capitalize on next-generation technology ramps.