This article first appeared on GuruFocus.

Annual Revenue: $28.4 billion, a 4% increase from fiscal 2024.

Semiconductor Systems Revenue: Up 4%, with record foundry systems revenue and record DRAM sales outside China.

Applied Global Services Revenue: Grew 3% to a record $6.4 billion.

Display Revenue: Increased by 20% year-over-year.

Non-GAAP Gross Margin: 48.8%, up 120 basis points, the highest level in 25 years.

Non-GAAP Operating Expenses: Grew 5%, driven by a 10% increase in R&D investments.

Non-GAAP Earnings Per Share: Increased 9% year-over-year.

Cash from Operations: Nearly $8 billion.

Free Cash Flow: $5.7 billion, with $2.3 billion in capital spending.

Shareholder Returns: $6.3 billion distributed, including $1.4 billion in cash dividends and $4.9 billion in share repurchases.

Fiscal Q4 Revenue: China revenue declined to 29% of total company revenue.

Q1 Fiscal 2026 Revenue Guidance: $6.85 billion, plus or minus $500 million.

Q1 Fiscal 2026 Non-GAAP EPS Guidance: $2.18, plus or minus $0.20.

Q1 Fiscal 2026 Non-GAAP Gross Margin Guidance: Approximately 48.4%.

Warning! GuruFocus has detected 5 Warning Signs with AYTU.

Is AMAT fairly valued? Test your thesis with our free DCF calculator.

Release Date: November 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Applied Materials Inc (NASDAQ:AMAT) delivered fiscal fourth quarter results above the midpoint of guidance, marking the sixth consecutive year of growth.

The company has strong leadership positions in leading-edge foundry logic, DRAM, and high-bandwidth memory, which are expected to be the fastest-growing areas of the semiconductor equipment market.

Applied Materials Inc (NASDAQ:AMAT) is well-positioned to benefit from the AI computing boom, which is expected to drive substantial investment in advanced semiconductors and wafer fab equipment.

The company has launched innovative products such as the Xtera epitaxi system, Kinex die-to-wafer bonder, and PROVision 10, which enhance its competitive edge in the market.

Applied Materials Inc (NASDAQ:AMAT) increased non-GAAP gross margin by 120 basis points to 48.8%, the highest level in 25 years, driven by a richer mix of advanced systems and price increases.

Trade restrictions have significantly impacted Applied Materials Inc (NASDAQ:AMAT)'s accessible market in China, reducing its market share and revenue from the region.

The company's growth rate in fiscal 2025 was tempered by increased trade restrictions and an unfavorable market mix.

Applied Materials Inc (NASDAQ:AMAT) anticipates lower wafer fab equipment spending in China in 2026, with no significant changes expected in market restrictions.

The company faces increasing competition from domestic Chinese companies in the CVD, CMP, and etch segments.

Applied Materials Inc (NASDAQ:AMAT) expects its semiconductor systems and AGS operating margins to be reduced due to the full allocation of corporate support costs starting in fiscal 2026.

Q: How have recent conversations with clients evolved, and how is Applied Materials preparing its supply chain for anticipated growth? A: Gary Dickerson, President and CEO, noted that AI is the primary focus for customers, driving demand in segments like leading-edge foundry, logic, and DRAM. Applied Materials is in deep co-innovation relationships with customers, providing high visibility into future technology nodes. The company has seen a major improvement in customer demand visibility, with some customers providing more than one year, and in some cases, two years of visibility. This improved visibility is critical for ensuring on-time delivery to meet customer needs.

Q: How should we think about the impact of headcount reduction on gross margins and operating expenses into 2026? A: Brice Hill, Chief Financial Officer, explained that the reduction is part of a long-term program to increase velocity and productivity. The Q1 spend guide reflects this, with no typical uplift for annual pay raises and share-based compensation. The company will add back necessary skills throughout 2026, focusing on optimizing the workforce to meet future demand.

Q: How is Applied Materials positioned against increasing competition in leadership products, especially with domestic China competition? A: Gary Dickerson emphasized strong positions in gate-all-around and backside power, with leadership in DRAM and advanced packaging. Despite trade restrictions impacting market access in China, Applied Materials is performing well where it can compete. The company is optimistic about maintaining and potentially gaining share in China ICAPS and globally, with new products and innovations in the pipeline.

Q: What is the outlook for wafer fab equipment (WFE) growth in 2026, and how is Applied Materials positioned? A: Brice Hill expects strong growth in 2026, led by leading-edge foundry logic and DRAM, driven by AI data center demand. While there may be some digestion in China and ICAPS, the overall outlook is positive. Applied Materials is well-positioned to benefit from favorable market trends and expects to outperform in these segments.

Q: How does Applied Materials view the impact of AI demand on its product mix and market position? A: Gary Dickerson highlighted that AI demand is driving growth in leading-edge foundry logic and DRAM, where Applied Materials holds strong positions. The company is gaining share in gate-all-around and DRAM, with high visibility into future technology nodes. Applied Materials is confident in its ability to capture more than 50% of its served market in these segments, supported by strong customer relationships and innovative product offerings.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.