Applied Materials (AMAT) shares returned 143.9% in the twelve months ending October 5, 2026, a performance that far outpaced the S&P 500's 17.1% gain over the same period. This surge was driven by chipmakers' increased demand for the manufacturing equipment Applied sells for advanced chips, a shift that management had signaled more than ten months before the stock's major run began.
During its fiscal Q4 2024 earnings call on November 14, 2024, Applied Materials management noted that the chip industry was moving toward energy-efficient computing. This pivot laid the groundwork for the subsequent rise in artificial intelligence workloads, which require high-performance chips constrained by strict thermal and power limits. The company followed this strategic shift with concrete investment, announcing on April 14, 2025, that it had purchased a 9% stake in BE Semiconductor Industries. The two firms had collaborated for four years on hybrid bonding, a chip packaging technique essential for advanced architectures.
Despite these forward-looking moves, Applied's financial results appeared modest before the stock's significant appreciation. Revenue increased by 6.8% year-over-year in fiscal Q2 2025 and by 7.7% in fiscal Q3 2025. On the fiscal Q3 2025 call held on August 14, 2025, executives continued to discuss uncertainties regarding the company's business in China. The dramatic acceleration in sales occurred only after the stock's run had already started.
In fiscal Q3 2026, Applied recorded a record revenue of $9.1 billion, up 25% from the previous year. The Semiconductor Systems segment, which provides chipmaking equipment, accounted for $7 billion of that total. Management has expressed confidence in continued growth, guiding fiscal Q4 2026 revenue to $10.25 billion with a margin of plus or minus $500 million during its August 13, 2026 call. This forecast represents a step above the record set in the prior quarter.
The company has raised its revenue growth forecast for calendar year 2026 twice since February and expects packaging revenue to grow by more than 70% this year, a sector where its stake in BE Semiconductor Industries is positioned. However, investors are already paying a premium for these expectations. Applied Materials stock trades at 46.5 times earnings, compared to 21.5 for the S&P 500. Shares fell by approximately 4% in trading the day after the earnings call, despite results and guidance exceeding expectations.
The $10.25 billion figure remains a forecast rather than a realized result. If fiscal Q4 2026 revenue lands within management's range, it would indicate that demand continues to build. Conversely, revenue below that range would serve as the first sign that growth is slowing from its aggressive pace, even if it still marks a sequential record.