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Applied Materials says AI boom is driving semiconductor equipment demand higher. Applied Materials (NASDAQ:AMAT) sees continued strength in semiconductor equipment demand as artificial intelligence-related investment drives customer forecasts higher, Chief Financial Officer Brice Hill said at Citi's 2026 Global TMT Conference. Hill said the company's rolling eight-quarter forecasts from its largest customers, particularly DRAM and leading-edge logic manufacturers, have increased throughout the year. He attributed the trend to demand for AI systems and pointed to rising capital-expenditure forecasts from cloud service providers, which he said exceed $700 billion for U.S. companies and approach $1 trillion globally. "Really all the indicators, all the arrows point up," Hill said. "Our customers are investing, our customers' customers are investing and highly profitable, and we're investing." AI systems drive demand across logic, memory and packaging. Applied Materials is monitoring the design of AI systems, including GPU, accelerator, CPU and memory content, to assess future demand by device category. The company is also tracking more than 100 fab projects globally, with more than 10 added during each of the past two quarters, Hill said. He said clean-room availability remains an important constraint on industry capacity growth over the medium term. Applied is evaluating the timing of new fabs and the capacity they will add, while using customer forecasts to plan for demand. Hill identified advanced packaging as a major growth area alongside leading-edge logic and DRAM. Applied's advanced-packaging business generated $1.4 billion in revenue last year, and the company expects it to grow by more than 70% this year. He said advanced packaging should continue growing in line with leading-edge logic and DRAM as AI systems require high-performance interconnects among processors, accelerators and high-bandwidth-memory stacks. The company is also investing in panel-level packaging, which uses larger substrates to support more chips and higher-quality interconnects in computing systems. Hill said the industry remains in the development stage, with Applied generating revenue from panel-processing equipment but no volume production yet underway. The company recently acquired NEX, which provides fine-line interconnect capabilities for panel-level packaging. ICAPS recovery, NAND remains upgrade-driven. Hill said Applied expects moderate growth in its ICAPS business in 2026. ICAPS encompasses IoT, communications, automotive, power and sensor markets and had been weak for the previous several years as China added significant capacity. Utilization rates are now improving, Hill said, and Applied expects a more normal growth year for ICAPS next year. He characterized normal growth in the underlying device markets as mid- to high-single digits, with equipment demand eventually tracking that growth as utilization normalizes. Discover more Stock market education Financial news subscription NASDAQ stock recommendations NAND bit demand remains strong, in the "high 20% range," according to Hill. However, he said that gains in layer counts have made NAND manufacturing more productive, allowing producers to add bit capacity with fewer wafers. As a result, NAND remains more dependent on equipment upgrades than greenfield fab construction, keeping the market smaller than the DRAM opportunity. By contrast, Hill said DRAM capacity is entering a more significant greenfield investment cycle. He estimated that the industry had about 1.6 million DRAM wafer starts per month a year ago and is adding roughly 400,000 wafer starts per month this year. He expects additions of 300,000 to 400,000 wafer starts per month over the next several years. Hill said an upgrade fab requires roughly 25% of the equipment investment of a greenfield facility. He estimated that process equipment for 100,000 wafer starts of greenfield capacity could total about $10 billion, illustrating the larger equipment opportunity associated with new DRAM fabs. Capacity, services and process control. Applied has invested to support the ability to produce twice its current quarterly system output by 2028, Hill said, emphasizing that the target is a capacity statement rather than a revenue forecast. The company sends aggregated eight-quarter demand outlooks to suppliers by component type to help them plan hiring and capacity investments. Hill said Applied's services business is growing more than 20% this year, aided by high utilization across leading-edge logic, DRAM, ICAPS and NAND. Customers are purchasing more spare parts and components to maintain output, he said. The company's longer-term services outlook is for mid-teens growth, supported by an installed base that is expanding by roughly 5% to 7% annually and higher revenue per tool from new offerings. Those offerings increasingly include AI-based services that use tool sensors and operating data to help customers improve yield and output, Hill said. Discover more Precious Metals Investment strategy guide Derivatives Applied also expects its process diagnostics and control business to grow more than 50%. Hill said demand is being driven by more complex semiconductor architectures, including gate-all-around transistors, which require electron-beam inspection to identify buried defects that cannot be seen through optical inspection methods. On profitability, Hill said Applied's approximately 300-basis-point gross-margin improvement over the past three years has reflected the greater value of its product solutions and improved pricing processes. The company applies value-based pricing to both new and existing products, he said, while also accounting for higher costs for labor, materials and components. About Applied Materials (NASDAQ:AMAT). Applied Materials, Inc is a U.S.-based supplier of equipment, services and software used to manufacture semiconductor chips, flat panel displays and other advanced materials. Headquartered in Santa Clara, California, the company designs and sells capital equipment and related technologies that enable production of integrated circuits, display panels and materials used across the electronics supply chain. Applied Materials' offerings include process equipment and factory software that support critical steps in device fabrication, such as deposition, etch, implantation, inspection and metrology, as well as systems for packaging and advanced heterogeneous integration.

Applied Materials appoints Akash Palkhiwala to board of directors. Palkhiwala has also been appointed to the board's Audit Committee. September 8, 2026 Assistant Editor Applied Materials, Inc. appointed Akash Palkhiwala to serve on its board of directors. Palkhiwala has also been appointed to the board's Audit Committee. As Chief Financial Officer and Chief Operating Officer of Qualcomm Incorporated, Palkhiwala brings extensive financial and operational leadership experience in the computing and technology industry. Palkhiwala has served as Qualcomm's CFO since 2019 and COO since 2024, and is responsible for the finance organization, global go-to-market teams, semiconductor operations, and IT. He has also served in various finance leadership roles since joining Qualcomm in 2001. Previously, Palkhiwala was a private equity analyst at KeyBank. "Akash is a terrific addition to our board of directors," said Tom Iannotti, Chairman of the Board. "His track record of leadership in finance and decades of experience in the semiconductor industry will add to the strength of Applied Materials' board and serve us well in our next phase of growth."

The AI buildout is turning Applied Materials (AMAT) into A profit machine. Published on August 27, 2026 at 4:35 pm by maham fatima in hedge funds, news. On August 13, Applied Materials (NASDAQ:AMAT) reported the biggest quarter-over-quarter revenue jump in its history, and the numbers back up the headline. Revenue climbed to $9.12 billion, up 25% year over year, while non-GAAP earnings per share jumped 41% to $3.50. Behind those figures sits a company that says its main constraint right now isn't finding customers; it's building fast enough to keep up with them. A backlog that keeps growing. Management's core argument is that demand for advanced chips is running well ahead of what the industry can supply, and that gap is showing up directly in Applied's order book. Customers are now handing the company rolling eight-quarter forecasts, with some conversations stretching out to 2030, and more than 10 new fab projects were announced in the quarter alone. That visibility is already showing up in the segment results. DRAM revenue, boosted by high bandwidth memory packaging, grew 52% year over year to a record, and advanced packaging overall is now projected to grow more than 70% in calendar 2026 as chipmakers shift toward 3D chiplet stacking. Applied added Broadcom as an EPIC innovation partner during the quarter, bringing its total count of these co-development partnerships to 11, spanning chipmakers, system companies and research universities. Process diagnostics and control revenue is tracking to grow more than 50% this year, faster than the overall systems business. None of this has come at the expense of profitability. Non-GAAP gross margin reached 50.4%, marking the 13th straight quarter of year-over-year expansion, and operating margin hit a record 34%. Guidance for the next quarter calls for revenue of $10.25 billion, which would be a 51% increase from a year earlier. The price of growing fast. That growth isn't free. Chief Financial Officer Brice Hill said the company expects its tax rate to rise to roughly 13% in 2027 as it absorbs the impact of the global minimum tax, a direct hit to the bottom line that has nothing to do with operations. Hill also pointed to "ramp costs that are in the forecast," a reference to the more than 1,500 people Applied hired this quarter in manufacturing and customer support to keep pace with demand. New hires take time to reach full productivity, which means near-term expense growth may outpace revenue in some periods even as the top line surges. Applied is also flagging that its fiscal first quarter of 2027 will run 14 weeks instead of the usual 13, producing a higher-than-normal step-up in operating expenses for that period. On top of that, Chief Executive Gary Dickerson acknowledged that customers have historically been constrained by clean room space when it comes to taking tool deliveries, a structural bottleneck that, even as customers find workarounds, could resurface if capacity additions don't keep pace with equipment orders. Layer in that China still accounted for 28% of total revenue, and any shift in export rules or regional demand remains a variable the company doesn't fully control. Wall street's quiet confidence. Hedge fund interest in Applied Materials held essentially flat going into this report, with 137 funds holding a position in the most recent quarter compared with 138 in the prior one, which reads as neither accumulation nor retreat. Short interest sits at just 1.50% of the float, a level that signals almost no organized skepticism toward the stock. As of August 27, investors are paying a forward P/E of 27.17 for that growth profile, a multiple that only makes sense if the current AI-driven capacity boom keeps compounding rather than leveling off. The open question. Applied Materials is heading into fiscal 2027 with more demand visibility than management says it has ever had, and margins that have now expanded for 13 consecutive quarters. Still, a rising tax rate, a wave of new hires still ramping into productivity, and a longer fiscal quarter next year all chip away at the operating leverage that got the company here. The fab and packaging investments now underway need to turn into shipped systems without running into the clean room bottlenecks that have slowed deliveries in the past.