Applied Materials Says Chip Demand Remains “Much Higher Than Supply”
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On the fiscal fourth-quarter earnings call on November 12, 2026, Applied Materials (NASDAQ:AMAT | AMAT Price Prediction) President and CEO Gary Dickerson said demand for advanced semiconductors remains “much higher than supply.” Dickerson also said Applied’s current view is that 2027 wafer fab equipment (WFE) demand, meaning industry spending on chipmaking tools, will rise more than 30% year over year.
That 30% figure covers the whole industry and is separate from Applied’s own guidance. CFO Brice Hill said shipments to China will probably be under 25% of the business in 2027.
Applied Materials closed at $380.95, down 3.58%, ahead of the results, for a market value of $302.3 billion. About an hour after the release, the stock traded at $381.022, flat after a record quarter.
What Applied Reported Versus What It Expects
For the quarter ended October 25, revenue reached a record $10.41 billion, up 53% from $6.80 billion and ahead of the roughly $10.30 billion expected. Non-GAAP EPS of $4.16 rose 92%, topping the $4.05 to $4.06 consensus, and GAAP EPS was $3.40.
Brice Hill said the $2.00 billion repurchase was Applied’s largest quarterly buyback in more than eight years and that $10.8 billion of authorization remains.
The forward figures are management expectations. Gary Dickerson expects Semiconductor Systems revenue to grow more than 40% in calendar 2026 and advanced packaging about 90%, and Brice Hill expects cloud capex to rise more than 50% in 2027 (we covered seven suppliers riding that data-center expansion, from power to cooling, in a free AI infrastructure report). Applied did not detail customer orders behind the 2027 view in its release.
Why a Shortage Favors Toolmakers
When chip supply trails demand, customers forecast further out and order earlier, which gives equipment suppliers pricing power. Non-GAAP gross margin hit 50.6%, up 250 basis points, and Semiconductor Systems operating margin rose to 38.8% from 29.3% as segment revenue reached $7.996 billion against $4.879 billion.
Clean Rooms, China and a 14-Week Quarter
Brice Hill said clean room capacity remains a limiting factor for how much equipment the industry can take in, even as Applied tracks more than 20 fab ramps and line expansions in 2027. Equipment shipments depend on customers finishing the buildings that house the tools.
Brice Hill guided fiscal Q1 revenue to $11.1 billion, give or take $500 million, up 58% at the midpoint, with non-GAAP EPS of $4.35, give or take $0.20. Brice Hill also said the quarter has 14 weeks, so the extra week flatters that growth rate.
China supplied $2.642 billion of quarterly revenue, second only to Taiwan, and Applied paid a $253 million export-control settlement in fiscal 2026, so a smaller China share reduces exposure to new trade rules.
Gary Dickerson said about 60% of an AI data center’s capital cost is silicon, and more than 85% of that silicon is leading-edge foundry logic, DRAM and advanced packaging. That ties the 2027 view to AI capex. Lam Research (NASDAQ:LRCX) and KLA (NASDAQ:KLAC) closed down 0.89% and 2.30% alongside Applied, and the November 17 report from NVIDIA (NASDAQ:NVDA) may move the group more than these results did.
What the Results Mean for Applied Investors
Applied’s results give investors a constructive set of data to research further. The stock closed about 48% below its $739.67 52-week high and about 19% above where it finished on November 5 at $319.25, while margins and buybacks both point higher.
Lam carries more China exposure because China was its largest region last quarter at $2.876797 billion. KLA guides to a higher 62.5% non-GAAP gross margin, but Applied’s DRAM and packaging growth ties it more directly to the shortage Dickerson described.
If Applied holds above $319.25 through NVIDIA’s report, the 2027 outlook remains intact. If the stock closes below that level, or fiscal Q1 Semiconductor Systems revenue comes in short of Brice Hill’s $8.7 billion guide, it would signal the 2027 view is slipping.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
