Mitch Lawler
4 min read
Applied Materials just reported record Q4 2026 numbers, yet the stock slipped 2.8% to US$370.25 by Friday’s close. That reflects investor emotion running ahead of the spreadsheet. Revenue for the quarter was US$10.4b, with basic EPS at US$3.43, capping a fiscal year that management described as record on both sales and earnings.
Investors came into this report after a choppy stretch, with the share price down over 17% in the past month and almost 27% over three months. Today’s pullback appears more like profit taking and nerves around expectations than a verdict on the underlying earnings results.
Love Applied Materials’ record quarter but wary of buying into a stock that has just seen a sharp pullback and profit taking? Take a look at our list of sturdier balance sheet opportunities in the list of solid balance sheet and fundamentals stocks (24 results).
Q4 2026 Earnings Summary
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Revenue, Q4 2026 vs. Q4 2025: US$10,409m vs. US$6,800m (up about 53%)
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Net Income (Excl. Extra Items), Q4 2026 vs. Q4 2025: US$2,718m vs. US$1,897m (up about 43%)
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Basic EPS, Q4 2026 vs. Q4 2025: US$3.43 vs. US$2.39 (up about 44%)
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Net Profit Margin, Trailing 12 Months vs. Prior Year: 29.3% vs. 24.7% (margin higher year on year)
Earnings look strong on the income statement, but investors who care about valuation usually pay just as much attention to the cash moving through the business. When you focus on Applied Materials’ cash flows alone, the stock could be a hefty 46% overvalued.
Applied Materials’ AI Ambition Meets Hard Numbers
The analyst consensus narrative on Simply Wall St argues that Applied Materials can turn AI hype into higher value businesses, not just more tools shipped.
“The main thing that has to go right is that Applied Materials continues to translate AI related demand, EPIC partnerships and expanded manufacturing capacity into growth in higher value segments like advanced packaging, process diagnostics and services while managing investment and ramp costs.”
Q4 and fiscal 2026 results show that ambition starting to line up with execution. Advanced packaging revenue was reported as up about 90% in calendar 2026 and process diagnostics and control grew more than 50%. Applied Global Services delivered US$1.9b in Q4 with about 30.5% operating margin. Company gross margin of 50.6% in Q4, alongside record free cash flow of US$6.2b for the year, suggests ramp spending has not swamped profitability so far.
Bear Case: Margin Ceiling And Cash Strain On AMAT
Bears worry that the same investment push that fuels AI growth for Applied Materials could quietly cap profitability and cash conversion.
