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Applied Materials’ $8.95 Billion AI Setup: Can Record Margins Keep Expanding?

Applied Materials reported results for the second fiscal quarter of 2026 marked by record revenue, earnings, and gross margins—the highest the company has seen in over 25 years. The semiconductor equipment market showed robust growth, driven largely by accelerating and diversifying AI demand that spans generative AI training and inference workloads as well as emerging agentic AI applications. These AI advancements are intensifying needs for specialized semiconductor manufacturing equipment, particularly in leading-edge foundry-logic, DRAM, and advanced packaging, which are areas where Applied Materials holds strong market leadership and a broad product pipeline. Quarterly revenue reached $7.91 billion, up 13% sequentially and 11% year-over-year, with non-GAAP gross margin improving by 80 basis points to 50%. Operating margins expanded to 32.1%, while earnings per share rose 20% to a record $2.86. The Semiconductor Systems segment, which includes major product lines, posted $5.