AMAT 4Q25: Strong AI Demand Translating into Equipment Revenue

During the earnings call, Applied Materials provided a robust outlook, projecting that its semiconductor system business will grow by more than 20% in CY2026. Although demand is heavily weighted toward the second half of the year, management indicated that underlying demand actually exceeds this 20% growth figure. The primary bottleneck is currently a lack of cleanroom space at customer sites rather than a lack of orders, which suggests that this strong growth momentum is well-positioned to extend into 2027. We maintain an optimistic view on Applied Materials due to several key factors, including sustained investment from TSMC, potential upside from Samsung Foundry and Intel Foundry as they benefit from AI demand and potential external customers, and intense equipment demand from memory manufacturers driven by HBM requirements. Additionally, the company addressed investor concerns regarding China, stating that its market share in the permissible ICAPS segment remains stable and is expected to potentially increase in the coming years.

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