MW Applied Materials' stock jumps after earnings. The CEO just made a bold prediction for the chip sector.

By Emily Bary

Applied Materials expects to see more than 20% growth in semiconductor-equipment revenue this year as AI potentially lifts overall chip-industry sales to $1 trillion

Applied Materials' CEO says the company has "strong leadership positions" in areas of chip equipment particularly exposed to the AI boom.

Applied Materials shares are having an unusually strong reaction to earnings.

The chip-equipment stock rose 13% in Thursday's extended session, a move that would be one of its best post-earnings reactions since 1999 if it hold's through Friday's close, according to Dow Jones Market Data. Looking back just at the past five years, Applied Materials shares (AMAT) have only taken one double-digit swing in reaction to earnings, and that was a move lower.

Investors are cheering the company's upbeat guidance, which reflects the ways the company is benefiting from artificial-intelligence tailwinds. The company expects more than 20% growth in its semiconductor-equipment business this calendar year.

Applied Materials' shorter-term outlook sat well with Wall Street too. The company expects $7.65 billion in revenue, at the midpoint, for the ongoing quarter. Analysts had been expecting $7.18 billion.

"The race to build out AI infrastructure is driving unprecedented spending on semiconductors, semiconductor manufacturing capacity, and research and development," CEO Gary Dickerson said on the earnings call.

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He noted particular momentum in leading-edge logic chips, high-bandwidth memory products and advanced packaging. "These are areas where Applied has strong leadership positions as well as an innovative pipeline of solutions to enable next-generation technologies," Dickerson said.

And "with the accelerated growth of AI end markets," Dickerson now thinks revenues for the global chip industry could hit $1 trillion in 2026, "several years earlier than prior predictions."

Bernstein analyst Stacy Rasgon said that Applied Materials' "strength seems set to continue" into next calendar year "as cleanroom space comes online." That's a reference to manufacturing environments for chip fabrication.

The dynamic positions Applied Materials "for a very strong trajectory" versus peers and one that could help close the gap in stock multiples between the company and its rivals, according to Rasgon.

Jefferies analyst Blayne Curtis also highlighted that Applied Materials' stock is the cheapest of the chip-equipment names, yet underpinned by a "strong growth outlook out through 2027" and "the best exposures" to DRAM and leading-edge markets.

The stock trades at about 31 times estimated earnings for the next 12 months, according to FactSet data, versus 36 times for Lam Research shares $(LRCX)$ and 34 times for KLA shares $(KLAC)$.

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C.J. Muse noted the potential for "relative outperformance" this year, with "help from Samsung as a meaningfully stronger customer in 2026, as well as Applied's strong leverage to greenfield investments."

Meanwhile, his "stretch goal" for Applied Materials is $18 in earnings per share, well above the FactSet consensus of about $13. Applied Materials' stock is a "top pick" for Muse, whose new $470 target price is 43% above Thursday's close.

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-Emily Bary

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February 12, 2026 22:31 ET (03:31 GMT)

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