Applied Materials Net Income Surges 71% to $2.03B in Q1 FY2026

Applied Materials Inc. (NASDAQ: AMAT), a semiconductor equipment manufacturer, reported net income of $2.03 billion for the quarter ending January 25, 2026, up 71% from $1.19 billion in the year-ago period. The surge in profit came despite a modest 2% decline in quarterly revenue. Read more earnings reports.

Revenue for the three months ending January 25, 2026 totaled $7.01 billion, down from $7.17 billion in the same quarter of fiscal 2025. The company's operating income fell 16% to $1.83 billion from $2.18 billion a year earlier, reflecting higher operating expenses that climbed 21% to $1.60 billion.

The company's effective tax rate dropped sharply during the quarter. Income tax expense was $302 million, down 68% from $934 million in the prior-year period, a shift that accounted for the outsized gain in net income relative to operating performance.

Segment Performance

The Semiconductor Systems segment, Applied Materials' largest business line, generated $5.14 billion in revenue, down 8% from $5.60 billion a year earlier. Operating income for the segment was $1.43 billion compared to $1.87 billion in Q1 FY2025.

The Applied Global Services segment posted $1.56 billion in revenue, up 15% from $1.35 billion, with operating income rising 30% to $438 million from $336 million. The Display and Adjacent Markets segment recorded $312 million in revenue versus $216 million a year ago, though it remained in an operating loss position of $34 million.

Balance Sheet and Cash Flow

Total assets stood at $37.64 billion as of January 25, 2026, up from $36.30 billion at the end of the prior quarter. Cash and cash equivalents were $7.22 billion, essentially flat from $7.24 billion as of October 26, 2025.

Cash from operations surged 82% to $1.69 billion for the quarter from $925 million in the year-ago period. The company used $780 million in investing activities and $931 million in financing activities during the three-month period.

Inventory rose to $5.99 billion from $5.92 billion at the end of the prior quarter. Total liabilities were $15.93 billion, while stockholders' equity increased to $21.72 billion from $20.42 billion as of October 26, 2025.

Per-Share Results

Diluted earnings per share came in at $2.54, up 75% from $1.45 in Q1 FY2025. The weighted average diluted share count was 799 million shares compared to 819 million a year earlier, reflecting the company's share repurchase activity.

Applied Materials had 793.6 million shares outstanding as of the end of the quarter, down from 818 million shares a year ago.

Key Financials

The company maintained long-term debt of $6.45 billion, unchanged from the prior quarter. Research and development expenses rose 8% to $928 million from $859 million, while selling, general and administrative expenses declined 11% to $411 million from $462 million.