Applied Materials (AMAT) Q3 FY2026 Earnings Call: Q&A Summary

Q: C.J. Muse from Cantor Fitzgerald asked for a framework regarding the growth outlook now compared to last quarter and into calendar 2027.

A: Brice Hill and Gary Dickerson stated that demand strengthened during the quarter with new projects and increased CapEx forecasts, leading them to expect another strong year in 2027.

Q: Timothy Arcuri from UBS asked if management would commit to 40% growth for systems given the implied deceleration in the December quarter.

A: Brice Hill noted that the company is committed to outgrowing the market and expects sequential growth in the first quarter, though he declined to provide specific guidance for that period.

Q: James Schneider from Goldman Sachs asked if there is any reason growth would not accelerate in 2027.

A: Brice Hill explained that clean room availability will be the primary factor governing growth levels.

Q: C.J. Muse from Cantor Fitzgerald asked how value-based pricing impacts gross margins into 2027.

A: Brice Hill and Gary Dickerson explained that value-based pricing was implemented to manage input cost changes and that they expect continued margin improvement as they leverage their portfolio.

Q: Vivek Arya from Bank of America asked why gross margins are lagging peers compared to the 2021 to 2025 period.

A: Brice Hill and Gary Dickerson noted that portfolios differ between companies, but emphasized that Applied Materials has achieved 13 consecutive quarters of year-over-year margin expansion.

Q: Stacy Rasgon from Bernstein asked why gross margins are flat in the near term despite revenue growth.

A: Brice Hill attributed this to ramp headwinds and the costs associated with adding customer service engineers.

Q: Vivek Arya from Bank of America asked how long-term agreements translate to visibility beyond 8 quarters.

A: Brice Hill and Gary Dickerson stated they have 5-year visibility into customer roadmaps, with 8 quarters of specific detail provided to the supply chain.

Q: Krish Sankar from TD Cowen asked if 2-year visibility provides pricing freedom or adds expense burdens.

A: Brice Hill and Gary Dickerson noted that visibility has improved planning significantly and that customers are increasingly focused on scheduled deliveries.

Q: Krish Sankar from TD Cowen asked if comments regarding 2030 visibility refer to technology or capacity.

A: Brice Hill and Gary Dickerson clarified that it involves both, as technology roadmaps extend 10 years while capacity needs are being planned for the long term.

Q: Harlan Sur from JPMorgan asked if the ICAP business is growing this year.

A: Brice Hill confirmed that ICAP will grow this year and next, with non-China customers showing positive growth.

Q: Blayne Curtis from Jefferies asked about the outlook for the NAND market.

A: Brice Hill stated that NAND will see strong growth this year from a small base but will be a slower grower in the out year compared to logic and DRAM.

Q: Mehdi Hosseini from Susquehanna asked when the NAND industry will start adding capacity to offset migration losses.

A: Brice Hill explained that the industry will likely continue with upgrades rather than capacity additions for the next few years, except for new projects in China.

Q: Harlan Sur from JPMorgan asked if AGS gross margins could reach 40% and operating margins the mid-30s.

A: Brice Hill and Gary Dickerson stated they expect to improve margins over time, driven by AI-enabled solutions and growth in the installed base.

Q: Timothy Arcuri from UBS asked if doubling manufacturing capacity implies $14 billion in revenue by 2028.

A: Brice Hill clarified that this is a capacity preparation measure rather than a specific revenue forecast.

Q: Blayne Curtis from Jefferies asked about the outlook for capital expenditures.

A: Brice Hill noted that CapEx will remain higher than normal but will decline as a percentage of revenue in 2027.

Q: Srinivas Pajjuri from RBC asked when panel-level packaging will become mainstream and about opportunities in hybrid bonding.

A: Gary Dickerson stated that packaging is a major growth driver and panel revenue will grow significantly next year, while hybrid bonding is a key inflection for performance.

Q: Srinivas Pajjuri from RBC asked about the impact of the 14-week quarter on revenue.

A: Brice Hill explained that the 14-week quarter primarily affects services, while equipment planning remains on a quarterly basis.

Q: Mehdi Hosseini from Susquehanna asked for thoughts on revenue and margins if WFE reaches $150 billion to $175 billion.

A: Gary Dickerson and Brice Hill stated they will provide more color at the October investor event but remain confident in share gains and margin expansion.