Earnings Reaction · FQ4 2026 · InitiationNovember 12, 2026 · reported after the close · call 4:30 PM ET (not incorporated)
Applied MaterialsAMAT · NASDAQ
A record on every line — revenue $10.41B (+53%), non-GAAP EPS $4.16 against $4.06, gross margin 50.6% — and a January-quarter guide of $11.1B and $4.35 that clears the Street's $10.83B and $4.23. The stock closed $380.95 and is $387 after hours, inside a third of the ~7% move options had priced. The reason is the calendar: the January quarter runs 14 weeks, and $11.1B over 14 weeks is about $793M a week against $801M a week just reported. The level is a record; the weekly pace is flat. We initiate at a probability-weighted $391: about 23× our fiscal 2027 EPS, which sits below the Street because we do not assume the second-half acceleration consensus needs.
Last
$387.00
After hours, ~3:20 PM CT · regular close $380.95 (−3.6%) · 52-wk $203.40–739.67
Fair value (prob.-wtd)
$391
+1% vs last · base $390 · initiation
Revenue
$10.41B · +53%
Guide $10.25B ± $0.5B · Street $10.30B · Q3 was $9.12B
Non-GAAP EPS
$4.16
Street $4.06 · guide $4.02 ± $0.20 · $2.17 a year ago
Non-GAAP gross margin
50.6%
48.1% a year ago · 50.4% in Q3 · operating margin 35.3% vs 28.6%
FQ1 guide (14 weeks)
$11.1B · $4.35
± $0.5B / ± $0.20 · Street $10.83B / $4.23 · includes a $0.04 tax benefit
DRAM share of systems
33%
26% in Q3 · 28% a year ago · about $2.64B, +93% y/y
Valuation
30× / ~23×
P/E on FY26 $12.89 · on house FY27E $17.00 · net cash ~$7.6B
Earnings reaction — beat, guide above, stock flat. Revenue $10.41B, +53%, above the $10.25B guide midpoint and $10.30B Street; non-GAAP EPS $4.16 against $4.06; non-GAAP gross margin 50.6% and operating margin 35.3%. Semiconductor Systems $8.00B (+64%), Applied Global Services $1.90B (+26%). Record operating cash flow of $3.30B, free cash flow $2.62B, and $2.00B of repurchases — the largest quarter of buybacks in more than eight years, per the CFO. China fell to 25% of revenue from 28% in Q3 and 29% a year ago. January quarter guided to $11.1B ± $0.5B and $4.35 ± $0.20. Why flat, as far as the filing shows: the guide covers 14 weeks, so the implied weekly revenue is about 1% below the quarter just reported, and the EPS guide carries a $0.04 tax benefit; the release repeats "multi-year revenue and profit growth" but puts no number on 2027. Not checked: the 4:30 PM ET call had not started when this was written — any 2027 equipment-spending figure, and the explanation for the weekly pace, would be there.
What the quarter said
| Line ($M) | FQ4 26 | FQ4 25 | Y/Y | Read |
|---|
| Revenue | 10,409 | 6,800 | +53% | Record; +14% on Q3's $9,115M; $159M above the guide midpoint |
| Non-GAAP gross margin | 50.6% | 48.1% | +2.5 pts | 50.4% in Q3 — margin held flat-to-up on $1.3B more revenue |
| Non-GAAP operating margin | 35.3% | 28.6% | +6.7 pts | Operating income $3.68B; opex grew 3% on revenue up 53% |
| Non-GAAP EPS | $4.16 | $2.17 | +92% | GAAP $3.40; diluted shares 798M, unchanged from a year ago |
| Semiconductor Systems | 7,996 | 4,879 | +64% | Segment margin 39.0% vs 29.6%; calendar 2026 growth now "more than 40 percent" |
| DRAM (33% of systems) | ~2,640 | ~1,370 | +93% | 26% of systems in Q3; memory in total is now 42% of the segment |
| Foundry and logic (58%) | ~4,640 | ~3,220 | +44% | Share down from 67% in Q3 — growing, but far slower than memory |
| Flash (9%) | ~720 | ~290 | +146% | From 7% in Q3 |
| Applied Global Services | 1,896 | 1,506 | +26% | Margin 30.5% vs 28.8%; the steadier line |
| China revenue | 2,642 | 1,964 | +35% | 25% of total vs 29%; Taiwan 28%, Korea 17%, U.S. 13% (from 10%) |
| Free cash flow (non-GAAP) | 2,616 | 2,043 | +28% | Operating cash flow $3,300M; capex $684M |
| Returned to shareholders | 2,421 | — | — | $2,000M repurchased, $421M dividends; fiscal-year total $4.75B |
| Receivables / contract liabilities | 8,998 / 3,585 | 5,185 / 2,566 | +74% / +40% | Receivables grew faster than revenue; customer prepayments up $1.0B |
The one metric that matters
Revenue per week. Fiscal Q4 was 13 weeks and $10,409M, about $801M a week. The January quarter is 14 weeks and guided to $11,100M, about $793M a week. On an equal-length basis the guide is roughly $10.3B — flat to slightly down — and the EPS guide of $4.35 works out near $4.00 for 13 weeks once the $0.04 tax benefit is removed, against $4.16 just earned. None of that is a cut: the Street's $10.83B already included the extra week and the guide beat it by 2.5%. But a company that grew 14% sequentially last quarter is guiding a pause in the run-rate, and the release does not say whether the limit is supply — fab space, long-lead components — or the order book. KLA said two weeks ago that demand was not its constraint. The call has to say the same for Applied.
Coded language and flags
- The 2027 number is still missing. The CEO's quote is "multi-year revenue and profit growth"; the calendar-2026 systems outlook was firmed to "more than 40 percent." There is no figure for 2027 in the release, as there was none last quarter.
- Memory did the work. DRAM went from 26% to 33% of systems revenue in one quarter while foundry and logic fell from 67% to 58%. That is the strongest tool-side evidence yet for the memory build-out — and it shifts Applied's exposure toward the most cyclical buyer in the industry.
- China mix fell, dollars did not. 25% of revenue is the lowest share in the comparison, but $2.64B is still 35% above a year ago. The bear case on export rules is a share that climbs back, not this quarter's number.
- Receivables up 74% on revenue up 53%. Partly a back-end-loaded record quarter; worth a line in the 10-K. Contract liabilities rose $1.0B, so customers are also paying ahead.
- Buyback into the drawdown. $2.0B in the quarter, the largest in more than eight years, bought while the shares were falling from their high.
Where it touches the threads
- Peak AI capex versus backlog. Same night, Cisco raised its hyperscaler AI revenue target for the fiscal year to $9B from $7.5B and Cerebras guided the December quarter up about 39% sequentially. Demand evidence is not the problem. Applied adds a different datapoint: the level is a record and the rate of change has paused.
- Micron as the barometer. DRAM equipment revenue nearly doubled year over year. Memory makers are spending their pricing gains on capacity; the risk the barometer exists to flag — supply catching demand — is being built now.
- Power and fab space. If the January pause is physical — cleanroom, power, components — it is the grid-bottleneck thread arriving at the equipment layer, and it pushes revenue right rather than removing it.
Valuation and scenarios
At $387 Applied is about $309B of market value on 798M diluted shares and roughly $301B of enterprise value after $14.1B of cash and investments and $6.5B of debt: 30× fiscal 2026 non-GAAP EPS of $12.89, about 23× our fiscal 2027 estimate of $17.00, and near 21× the Street's ~$18.70. Fair values are independent house estimates on fiscal 2027 (a 53-week year ending October 2027) at 18–27× earnings, a range that brackets where the stock has traded through this cycle's de-rating. Our base sits below consensus because the Street's ~$46.5B of revenue needs the weekly pace to rise about 10% from the January guide on average across the year; we assume a smaller second-half step-up.
Bull30% probability
$510+32%
- Fiscal 2027 revenue ~$47.5B (+38%): the January pause is supply, and DRAM plus leading-edge logic re-accelerate from spring
- Gross margin above 51%; EPS ~$19.00, at or above the Street
- 27× — still well under the 49× peak multiple of mid-2026
Base45% probability
$390+1%
- Fiscal 2027 revenue ~$44B (+28%): the weekly pace rises modestly in the second half
- Gross margin ~50.5%; EPS ~$17.00, about 9% below consensus
- 23× — roughly where it trades tonight
Bear25% probability
$250−35%
- Fiscal 2027 revenue ~$39.5B (+15%): memory capex digests, China share rebuilds under tighter export rules
- Gross margin slips toward 49%; EPS ~$14.00
- 18× — a cyclical multiple once estimates start falling
Probability-weighted fair value
$391
Fairly priced after a ~48% drawdown from the high, with the tails about even. The quarter argues for the bull; the weekly guide and a mix now 42% memory keep the bear in the frame. The 2027 framing on the call is what moves the weights.
What to watch
- The call (4:30 PM ET): a 2027 equipment-spending figure, and whether the January weekly pace is supply or orders
- April-quarter guide in February against roughly $10.3B on a 13-week basis — the first clean read on the run-rate
- DRAM share of systems against 33%, and foundry/logic dollars against ~$4.6B
- China against 25% of revenue
- Gross margin against 50.6% as memory mix rises
The desk read: the print did everything asked of it and the guide beat the Street, so a flat stock is the market discounting the 14th week. That leaves the call as the event. Levels: $376.09 (today's low) and $334 (last Friday's close) below; $395.08 (Wednesday's close) and $397.20 (today's high) above.
Sources
- Applied Materials fiscal Q4 2026 results, Form 8-K Exhibit 99.1, Nov 12, 2026 — https://www.sec.gov/Archives/edgar/data/6951/000162828026073360/exhibit991q42026earningsre.htm
- Prior guidance and Q3 mix: Applied Materials fiscal Q3 2026 results, Form 8-K Exhibit 99.1 — https://www.sec.gov/Archives/edgar/data/0000006951/000162828026056699/exhibit991q32026earningsre.htm
- Consensus (Q4 $10.30B / $4.06; January quarter $10.83B / $4.23; fiscal 2027 EPS ~$18.6–18.8) and the 14-week quarter per pre-print coverage (Investing.com, Nov 11–12). The earnings call is not incorporated in this note. Price: Schwab last, Nov 12, 2026 ~3:20 PM CT after hours — confirm against a live feed.
For educational/entertainment purposes. Sikuli Research publishes independent opinions; nothing here is investment advice, a research report under FINRA rules, or a solicitation to buy or sell any security. Fair-value scenarios are the author's assumptions and may change without notice. Prices are as of the time stated and should be confirmed against a live feed. The author may hold positions, long or short, in securities mentioned.