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Applied Materials Raises Outlook on AI-Fueled Demand; Shares Jump

AI infrastructure buildout is fueling demand for equipment used to produce high‑performance chips.

A smartphone with a displayed Applied Materials logo is placed on a computer motherboard in this illustration taken March 6, 2023. REUTERS/Dado Ruvic/Illustration/File Photo
Applied Materials CEO expects strong growth momentum to be carried into 2027.
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Overview

  • Applied Materials reported fiscal Q1 revenue of $7.01 billion and adjusted EPS of $2.38, both ahead of estimates.
  • The company guided Q2 revenue to about $7.65 billion (±$500 million) with adjusted EPS around $2.64, topping Wall Street forecasts.
  • Shares rose roughly 12%–14% after the beat and guidance, lifting peers as analysts boosted price targets, with several now as high as $450.
  • Management pointed to AI-driven investments and tighter DRAM/HBM supply as key tailwinds, with the CEO expecting equipment growth above 20% in 2026 and industry sales approaching $1 trillion.
  • To meet demand, Applied said it has nearly doubled system manufacturing capacity and increased inventories, while also disclosing a $252.5 million settlement with the U.S. Commerce Department over past China shipments.