Applied Materials Inc (AMAT) — Q1 2026 Earnings Call Transcript

Thank you, and good afternoon, everyone. Welcome to Applied Materials, Inc.’s 2026Q1 earnings conference call. Joining me today are Gary Dickerson, our President and CEO, and Brice Hill, our CFO. Before we begin, please note that today’s discussion contains forward-looking statements. Actual results may differ materially from those discussed. For more information, please refer to our SEC filings and the investor relations section of our website. I will now turn the call over to Gary Dickerson.

Thank you, Michael. Good afternoon, everyone, and thank you for joining us. Applied Materials, Inc. delivered solid results in 2026Q1, driven by strong demand across AI, foundry-logic, and memory. Our customers continue to accelerate node migrations and new 3D scaling approaches, which is expanding the opportunity for our differentiated materials engineering portfolio. We are executing well on our roadmap and investing to support our customers’ long-term capacity plans. I will now turn the call over to Brice Hill for the financial results.

Thank you, Gary. In 2026Q1, we delivered strong revenue, margins, and cash flow. We are focused on operational discipline and supply chain execution to meet customer demand while advancing our technology leadership. We returned capital to shareholders through repurchases and dividends, and we continue to invest in R&D and capacity to support long-term growth. We will now open for questions.

Thank you. Could you discuss the sustainability of AI-related demand into the next few quarters and how it influences your WFE outlook?

Thank you, Vivek. AI demand remains robust and broad-based, supporting sustained WFE strength. We see continued investment in leading-edge foundry-logic and in advanced packaging, as well as improving trends in DRAM and NAND. Our pipeline and customer engagements give us confidence in demand durability over the coming quarters.

Thank you. How should we think about gross margin trajectory given mix and any supply constraints?

Thank you, Stacy. Gross margin will reflect product and customer mix, as well as continued improvements in productivity and cost. We are managing supply constraints proactively, and we expect margins to trend favorably as mix normalizes and our cost actions take hold.

Thanks. Can you comment on the cadence of orders in foundry-logic versus memory and any color on regional trends?

Thanks, Timothy. Foundry-logic remains healthy with strength at leading nodes, while memory is improving, led by DRAM and HBM-related investments. Regionally, we see continued momentum in the U.S. and Taiwan, with activity also picking up in Korea.

Thank you. What are you seeing in advanced packaging, and how does Applied Materials, Inc. differentiate?

Thank you, Atif. Advanced packaging is a strong growth vector driven by heterogeneous integration and AI. We differentiate with a comprehensive toolset across wafer-level packaging, hybrid bonding, and inspection/metrology, enabling customers to scale performance and power efficiently.

Thanks. Could you update us on your capacity expansion plans and lead-time improvements?

Thank you, Yu. We continue to expand capacity in critical product lines and are investing in supply resiliency. Lead times are improving as we qualify additional suppliers and streamline our operations.

Thanks. How are you approaching capital returns and balance sheet priorities this year?

Thank you, Joe. Our priorities remain consistent: invest in the business for long-term growth, maintain a strong balance sheet, and return excess cash to shareholders through buybacks and dividends. We expect to continue repurchasing shares at a steady pace while funding strategic investments.

Thank you. Any update on China demand and export controls impact?

Thank you, Harlan. We continue to comply with all regulations. Demand in China remains mixed by segment, with mature nodes steady and certain leading-edge areas impacted by restrictions. Our global footprint and broad portfolio allow us to support customers across regions within the regulatory framework.

Thanks. On services, can you talk about growth drivers and attachment rates?

Thank you, Krish. Services growth is supported by our expanding installed base, higher attachment to performance-based agreements, and analytics-driven optimization. We are investing in automation and remote capabilities to enhance uptime and yield for our customers.

Thank you. How are you positioned for gate-all-around and backside power transitions?

Thanks, Brian. We are well positioned with a broad suite of deposition, etch, CMP, and inspection/metrology solutions. Gate-all-around and backside power introduce new materials and integration challenges where our leadership in materials engineering and co-optimization is a key differentiator.

Thank you. Any color on equipment pricing and competitive dynamics?

Thank you, Chris. Pricing remains rational, reflecting the value of performance and total cost of ownership. Competitive dynamics are stable, and we continue to win based on technology differentiation, productivity, and service.

Thanks. Can you discuss EUV-related process steps and opportunities for Applied Materials, Inc. as customers scale HVM?

Thanks, Toshiya. EUV scaling increases requirements for patterning adjacencies, hard mask engineering, clean, and metrology/inspection. Our integrated solutions help customers improve line-edge roughness, CD control, and defectivity, which are critical as EUV moves deeper into HVM and to higher NA.

Thanks. What is your outlook for NAND versus DRAM WFE into the next few quarters?

Thanks, CJ. DRAM WFE is leading the recovery, particularly with HBM-driven investments, while NAND is improving at a slower pace as supply/demand rebalances. We expect both segments to grow through the year, with DRAM outpacing NAND near term.

Thank you. Can you update us on your long-term model and OpEx trajectory?

Thank you, Mehdi. We continue to target a balanced long-term model with operating leverage as revenue scales. OpEx will grow at a measured pace focused on R&D and customer enablement, with discipline on overhead.

Thanks. Any updates on HBM-specific tools and demand visibility?

Thanks, Srini. We are seeing strong pull for tools supporting HBM, including patterning, dielectric deposition, and advanced packaging steps like hybrid bonding and TSV-related processes. Visibility extends through multiple quarters given customers’ capacity plans.

Thank you. How is your metrology and inspection business trending?

Thank you, Charles. Metrology and inspection are growing as process complexity increases. Our e-beam and optical platforms, along with computational products, are gaining traction to address challenging use cases in leading-edge logic and memory.

Thank you. What is the status of your supply chain localization and resiliency initiatives?

Thank you, James. We have made progress diversifying suppliers, increasing dual-sourcing, and localizing critical components. These actions improve resiliency, reduce lead times, and support compliance with evolving trade regulations.

Thanks. Could you comment on CFIUS or regulatory developments that could impact your outlook?

Thank you, Vijay. We closely monitor regulatory developments, including CFIUS-related matters. Our outlook reflects the current regulatory environment, and we have incorporated appropriate assumptions. We will continue to engage with authorities and customers to ensure compliance.

Thank you. What are you seeing in mature nodes and ICAPS-related demand?

Thank you, Timm. ICAPS demand remains healthy, supporting power, automotive, and industrial applications. While growth is moderating from peak levels, our broad portfolio across deposition, etch, and inspection positions us well in mature and specialty nodes.

Thanks. Any update on your backlog and book-to-bill?

Thank you, Joe. Backlog remains elevated with a book-to-bill around unity. We are working through the backlog as supply improves and expect stability as demand broadens across segments.

Thanks for the follow-up. Are you seeing any pushouts or cancellations?

Thank you, Chris. We have seen some timing shifts typical for the industry, but no material cancellations. Overall demand signals remain constructive.

Thank you. Can you discuss your R&D priorities over the next year?

Thank you, Brian. Our priorities include gate-all-around, backside power, advanced packaging, EUV adjacencies, new materials for scaling, and expanding our metrology/inspection capabilities with AI-driven analytics.

Thank you. Any updates on services margins and mix?

Thank you, Harlan. Services margins are stable to improving, supported by higher attachment, software content, and productivity initiatives. Mix continues to shift toward performance-based contracts.

Thank you. How should we think about OpEx growth versus revenue in the near term?

Thank you, Stacy. Near term, OpEx will grow modestly, below the pace of revenue, as we drive operating leverage while prioritizing R&D and customer support.

Thank you for joining us today and for your continued interest in Applied Materials, Inc. A replay of this call will be available on our investor relations website. This concludes today’s call. Have a great day.