Q3 FY2026 results
| Metric | Result | Change |
|---|---|---|
| Revenue | $9.1 billion | up 25% year-over-year |
| Non-GAAP EPS | $3.50 | up 41% year-over-year |
| Semiconductor Systems Revenue | $7 billion | up 27% year-over-year |
| Applied Global Services Revenue | $1.8 billion | up 22% year-over-year |
| Non-GAAP Operating Margin | 34% | up 330 basis points year-over-year |
Guidance and outlook
- Company revenue of $10.25 billion, plus or minus $500 million for Q4.
- Non-GAAP EPS of $4.02, plus or minus $0.20 for Q4.
- Semiconductor Systems revenue of around $7.9 billion for Q4.
- AGS revenue of about $1.84 billion for Q4.
- Other revenue of around $510 million for Q4.
- Non-GAAP gross margin of approximately 50.4% for Q4.
How management sounded
Positive (+7 on our -10 to +10 scale). Management highlighted record-breaking results, raised revenue growth forecasts, and emphasized strong multiyear demand visibility from AI infrastructure. Management sounded more upbeat than on 48% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
Growth Outlook
Asked: C.J. Muse from Cantor Fitzgerald asked for a framework regarding the growth outlook for the year and into 2027.
Answer: Management stated that demand strengthened during the quarter, and they now expect growth to be stronger than the previously highlighted 30% for Semiconductor Systems.
Gross Margins
Asked: C.J. Muse from Cantor Fitzgerald asked about the sustainability of value-based pricing and its impact on gross margins.
Answer: Management explained that value-based pricing is applied to every tool to account for changing input costs and will continue to support margin expansion.
Visibility
Asked: Vivek Arya from Bank of America Securities asked how long-term agreements with memory customers translate into visibility beyond 8 quarters.
Answer: Management noted they have visibility into customer road maps for approximately 5 years, with specific 8-quarter forecasts used to align the supply chain.
Capacity Expansion
Asked: Timothy Arcuri from UBS asked if the plan to double manufacturing capacity implies a revenue target of $14 billion by 2028.
Answer: Management clarified that this is a capacity target to ensure readiness for a wide range of output requirements, not a specific revenue forecast.
What to watch before the next call
- The opening of the EPIC Center in Silicon Valley in October 2026.
- The impact of the 14-week Q1 fiscal 2027 quarter on operating expenses.
- The ability of customers to secure clean room space, which management identified as a key constraint on growth.
