Semiconductor equipment manufacturer Applied Materials reported third-quarter fiscal results that exceeded expectations across the board, with both revenue and profit showing significant growth. The company also announced plans to substantially increase manufacturing capacity to meet sustained strong demand for semiconductor solutions.

Third-quarter fiscal results surpass expectations

Net profit for the quarter reached $2.54 billion, or $3.17 per share, up from $1.78 billion, or $2.22 per share, in the same period last year. Excluding one-time items, adjusted earnings per share came in at $3.50, beating analyst estimates of $3.40. Revenue rose to $9.12 billion, compared to $7.3 billion in the prior-year period, also exceeding market expectations of $8.99 billion. Within this, semiconductor systems revenue totaled $7.04 billion, and applied global services revenue reached $1.78 billion.

Capacity expansion targets doubling output by 2028

Chief Financial Officer Brice Hill stated during an analyst conference call that the company is adding new manufacturing and customer support teams in response to long-term demand signals. The goal is to double quarterly semiconductor systems output capacity by 2028, with plans for the next capacity expansion already underway to support further demand growth through 2030. The company is also supporting profit margin expansion by raising prices on both new and existing products.

AI demand drives long-term growth

Chief Executive Officer Gary Dickerson noted that the company continues to benefit from robust demand in areas such as DRAM memory, foundry logic chips, and advanced packaging. These are areas where Applied Materials has a leading position and an innovative product pipeline, which is expected to support revenue and profit growth into 2027 and beyond. Dickerson said that with the rapid global adoption of AI driving unprecedented demand for materials engineering solutions, the company has raised its 2026 calendar year revenue expectations for semiconductor systems, and is confident that growth this year will outpace the overall market. In May, the company had already raised its semiconductor business growth forecast from over 20% to over 30%.

Fourth-quarter guidance exceeds expectations, yet stock price falls

The company forecast adjusted earnings per share between $3.82 and $4.22 for the fourth fiscal quarter, with revenue ranging from $9.75 billion to $10.75 billion, both above analyst estimates of $3.71 per share and $9.55 billion in revenue. The guidance includes approximately $7.9 billion in semiconductor systems revenue and $1.84 billion in services revenue. Despite the strong performance, Applied Materials shares closed down 2.5% on Thursday at $534.54, and slipped further by about 5% in after-hours trading to $507.97. The stock has more than doubled year-to-date.