Skip to content
    AMAT
    Earnings call· Oct 2025(Q4 FY25)

    APPLIED MATERIALS INC /DE AMAT

    Nov 13, 2025 Source

    Executive summary

    Applied Materials Q4 FY25 — Record Year Driven by AI and Advanced Technologies

    Applied Materials concluded FY25 with record annual results, driven by strong performance in leading-edge foundry logic and DRAM, despite trade restrictions and an unfavorable market mix. The company is strategically positioned for significant growth in CY26 and beyond, anticipating accelerated wafer fab equipment spending in the second half of CY26, fueled by AI computing and advanced semiconductor technologies. Management is optimizing operations and R&D to capitalize on these opportunities.

    Highlights

    5

    • Achieved record annual revenue of $28.4 billion in FY25, marking the sixth consecutive year of growth.

    • Non-GAAP gross margin increased by 120 basis points to 48.8% in FY25, reaching its highest level in 25 years.

    • Non-GAAP earnings per share increased 9% in FY25.

    • Generated nearly $8 billion in cash from operations in FY25.

    • DRAM revenues from leading-edge customers grew by more than 50% over the past four fiscal quarters.

    Concerns

    4

    • Increased trade restrictions reduced the accessible market in China, tempering FY25 growth.

    • China revenue declined to 28% of total systems and service revenues in FY25, down from a peak of 45% in Q1 FY24.

    • An unfavorable market mix in FY25 meant the fastest-growing areas had low or no Applied share.

    • Non-GAAP operating expenses grew 5% in FY25, primarily due to a 10% increase in R&D investments.

    Guidance & targets

    14
    CategoryTargetConfidence
    Company Revenue
    $6.85 billion, plus or minus $500 million
    high materiality
    High
    Non-GAAP EPS
    $2.18, plus or minus $0.20
    high materiality
    High
    Semiconductor Systems Revenue
    around $5.025 billion
    medium materiality
    High
    Applied Global Services (AGS) Revenue
    around $1.52 billion
    medium materiality
    High
    Corporate and Other Revenue
    around $305 million
    low materiality
    High
    Non-GAAP Gross Margin
    approximately 48.4%
    high materiality
    High
    Non-GAAP Gross Margin (H1 CY26)
    remain at that level
    medium materiality
    Medium
    Non-GAAP Operating Expenses
    around $1.33 billion
    medium materiality
    High
    Tax Rate
    around 13%
    low materiality
    High
    Company Revenue Growth
    another growth year
    high materiality
    High
    Wafer Fab Equipment (WFE) Spending in China
    lower
    medium materiality
    Medium
    WFE Spending Mix
    play more to Applied's strengths
    high materiality
    High
    Wafer Fab Equipment (WFE) Spending Acceleration
    likely to accelerate
    high materiality
    High
    Advanced Packaging Business Revenue
    double this business to $3 billion or more
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Semiconductor Systems
    FY25 revenue was up 4%, growing even as trade restrictions significantly reduced access to the China market. Generated record foundry systems revenue, along with record DRAM sales outside China, and posted record revenue in Taiwan and Korea. Q4 FY25 non-GAAP operating margin declined YoY. Q1 FY26 revenue is guided to around $5.025 billion, with operating margins reducing due to full allocation of corporate support costs.
    		up 4%4%—declined
    Applied Global Services (AGS)
    FY25 revenue grew 3% to a record $6.4 billion. The recurring parts, services, and software portion grew by double digits, while the 200-millimeter equipment business declined. Operating income from AGS more than covered the dividend payment. Q4 FY25 non-GAAP operating margin declined YoY. Q1 FY26 revenue is guided to around $1.52 billion, with operating margins reducing due to full allocation of corporate support costs. As of Q1 FY26, the 200mm equipment business moves to Semiconductor Systems, making AGS entirely recurring revenue.
    Recurring revenue portion growth: double digits (FY25)200-millimeter equipment business: declined (FY25)
    		$6.4 billion3%—declined
    Display
    FY25 revenue grew 20%. Q4 FY25 revenue exceeded expectations and was up 68% year-over-year. As of Q4 FY25, the Display business is reported in Corporate and Other. Q1 FY26 revenue is guided to around $305 million, composed primarily of Display revenue.
    		up 20%68%——

    Operational metrics

    20
    Non-GAAP gross margin
    48.8%up 120 basis points
    FY25

    Non-GAAP gross margin for fiscal year 2025, compared to fiscal year 2024.

    Non-GAAP gross margin
    48.4%
    Q1 FY26

    Guidance for non-GAAP gross margin in Q1 FY26, expected to remain at this level until volumes ramp in H2 CY26.

    Non-GAAP operating expenses
    5%grew
    FY25

    Growth rate of non-GAAP operating expenses in fiscal year 2025.

    Non-GAAP operating expenses
    $1.33 billionup slightly from fiscal Q4
    Q1 FY26

    Guidance for non-GAAP operating expenses in Q1 FY26.

    Capital spending
    $2.3 billion
    FY25

    Capital spending in fiscal year 2025, including investment in the EPIC Center.

    Capital returned to shareholders
    $6.3 billion
    FY25

    Total capital distributed to shareholders in fiscal year 2025.

    Cash dividends paid
    $1.4 billion
    FY25

    Cash dividends paid in fiscal year 2025.

    Quarterly dividend per share
    $0.46increased by 15%
    FY25

    Quarterly dividend per share, increased during fiscal year 2025.

    Share repurchase program
    $4.9 billion
    FY25

    Amount allocated to the share repurchase program in fiscal year 2025.

    Shares outstanding reduction
    3%more than
    FY25

    Reduction in shares outstanding due to buybacks in fiscal year 2025.

    Tax rate
    13%
    Q1 FY26

    Modeled tax rate for Q1 FY26.

    China revenue share
    28%
    FY25

    China's contribution to total systems and service revenues in fiscal year 2025.

    China revenue share
    25%
    Q4 FY25

    China's contribution to total systems and service revenues in Q4 FY25.

    China revenue share
    29%well below a peak of 45% in Q1 FY24
    Q4 FY25

    China's contribution to total company revenue in Q4 FY25, compared to its peak in Q1 FY24.

    Trade restrictions impact on China WFE market
    10%
    FY24

    Estimated portion of China WFE market restricted for Applied in fiscal year 2024.

    Trade restrictions impact on China WFE market
    over 20%more than double that amount
    FY25

    Estimated portion of China WFE market restricted for Applied in fiscal year 2025.

    200-millimeter equipment business revenue
    $125 million
    Q1 FY26

    Approximate revenue of the 200-millimeter equipment business, reclassified from AGS to Semiconductor Systems starting Q1 FY26.

    Leading-edge DRAM customer revenue growth
    50%more than
    past 4 fiscal quarters

    Revenue growth from leading-edge DRAM customers over the past four fiscal quarters.

    Advanced packaging business growth target
    $3 billion or moredouble this business
    next few years

    Target to double the advanced packaging business revenue from its current level over the next few years.

    PVD business annual revenue
    $1 billion
    every year

    Annual revenue generated by the PVD business.

    Industry KPIs

    5
    MetricValueDetails
    Ai data center revenue15%%
    Wfe industry spend outlook10% to 15%%
    Design wins socket pipeline4 technology nodesnodes
    Node platform ramp schedule2-nanometer and beyondnm
    End market segment revenue mixChina declined to 28% of our total systems and service revenues in fiscal 2025 and to 25% for our fourth quarter.%

    Product announcements

    3
    ProductTypeDetails
    Xtera epitaxy systemlaunch
    Kinex integrated die-to-wafer bonderlaunch
    PROVision 10 eBeam metrology systemlaunch

    Capital programs

    1
    EPIC Center in Silicon Valleyon track
    Period spend: $1.15 billion

    Benefit: most advanced collaborative semiconductor equipment and process innovation facility in the world

    Over half of the $2.3 billion capital spending in FY25 was used in building the new EPIC Center. Construction is on track, and operations are expected to begin next year.

    Risks & headwinds

    2
    Trade restrictions and unfavorable market mixFY25, FY26

    Trade restrictions reduced accessible market in China by ~10% in FY24, and >20% in FY25. China revenue declined to 28% of total systems and service revenues in FY25.

    Mitigation: Competing well and maintaining market share where allowed. Expecting the FY26 spending mix to play more to Applied's strengths (leading-edge foundry logic, DRAM, advanced packaging). Not anticipating significant new restrictions in 2026.

    Digestion in China WFE spendingFY26

    China WFE spending expected to be lower in 2026. China WFE has been elevated, approaching 40% of total WFE in recent years.

    Mitigation: Expected to be more than offset by strength in leading-edge and DRAM segments. Longer term, China ICAPS market is expected to normalize to about 1/3 of WFE.

    What to watch in Q1 FY26

    5

    WFE spending acceleration

    beginning in the second half of calendar 2026
    Currentflattish for semi business in H1 CY26
    Targetlikely to accelerate

    Why it matters

    This acceleration, driven by AI, is expected to be a major growth driver for Applied Materials, particularly in leading-edge foundry logic and DRAM.

    our customers are indicating to us that wafer fab equipment spending is likely to accelerate beginning in the second half of calendar 2026.

    Q&A highlights

    5

    How has visibility changed given the $3-4 trillion AI infrastructure spending outlook, and how is AMAT preparing its supply chain?

    Gary Dickerson noted a major improvement in customer demand visibility, with some customers providing 1-2 years of visibility for large ramps of advanced factories, especially for H2 CY26. This improved visibility is critical for ensuring on-time delivery.

    “The other thing that I heard and we've been seeing over the last couple of months is a major improvement in customer demand visibility. So customers, just like you said, they're planning large ramps of advanced factories, and they want to make sure our supply chain operations and service teams are ready to deliver.”

    asked by Christopher Muse · answered by Gary Dickerson

    2 min read6 chapters

    Detailed Narrative

    01

    FY25 Performance and Market Dynamics

    Applied Materials achieved a sixth consecutive year of growth in FY25, with revenue up 4% to $28.4 billion and non-GAAP EPS up 9%. This growth was tempered by increased trade restrictions, which reduced China's contribution to 28% of total systems and service revenues, and an unfavorable market mix where Applied had lower share in the fastest-growing segments. Despite these headwinds, the company posted record foundry systems revenue and record DRAM sales outside China, along with record revenues in Taiwan and Korea.

    02

    AI-Driven Market Outlook

    The company anticipates significant opportunities from AI computing, which is reshaping the semiconductor roadmap and driving investment in next-generation computing infrastructure. Management expects 2026 to be another growth year, with revenue weighted towards the second half⚖️ of the calendar year, as WFE spending accelerates. This acceleration is particularly expected in leading-edge foundry logic, DRAM, and advanced packaging, segments where Applied holds strong leadership positions.

    03

    Inflection-Focused Innovation Strategy

    Applied's core strategy centers on inflection-focused innovation, partnering with customers to address critical technology challenges early in their roadmaps. Recent product launches exemplify this approach: the Xtera epitaxy system for 2nm gate-all-around transistors, the Kinex integrated die-to-wafer bonder for hybrid bonding, and the PROVision 10 eBeam metrology system for 3D devices. These innovations are designed to extend leadership in logic, DRAM, and packaging as advanced technology nodes ramp.

    04

    Co-Optimization and Service Solutions

    The company is expanding deep multi-year co-innovation engagements that focus on system technology co-optimization, providing chipmakers and designers earlier access to next-generation process technology. The flagship EPIC Center in Silicon Valley is under construction and expected to begin operations next year. Applied Global Services (AGS) delivered double-digit growth in its core service business in FY25, with over two-thirds of revenue from subscriptions, leveraging AI and digital tools for higher velocity and productivity.

    05

    Organizational Streamlining and Reporting Changes

    Applied undertook actions to reduce headcount and streamline its organization to scale more productively for future growth opportunities. Effective Q1 FY26, the Display business will be reported under Corporate and Other, and the 200-millimeter equipment business will move from AGS to Semiconductor Systems, making AGS consist entirely of recurring revenue. Additionally, corporate support costs will be fully allocated to business segments to optimize these costs.

    06

    China Market and Trade Restrictions

    Trade restrictions significantly impacted Applied's accessible market in China, growing from approximately 10% of China WFE in FY24 to over 20% in FY25, particularly affecting DRAM and ICAPS. While China revenue declined to 28% of total in FY25, management believes its share in accessible China ICAPS markets remained flat from 2024 to 2025 and expects normalized levels going forward⏳, with no significant new restrictions anticipated.

    AI-generated summary of the company’s earnings call. Not investment advice.