The non-GAAP EPS miss is the headline negative, but record revenue and strong Q3 guidance ($8.95B midpoint, +13% QoQ) suggest the miss is driven by one-time items (unrealized gains inflating GAAP, higher opex). Watch for analyst revisions on the Street-convention non-GAAP EPS and whether the AI capex cycle sustains the >30% equipment growth forecast. The 15% dividend hike signals management confidence in cash flows.
Price Chart
Executive Summary
Applied Materials reported record Q2 FY2026 revenue of $7.91B (+11% YoY) and record GAAP EPS of $3.51 (+33% YoY), but non-GAAP EPS of $2.86 missed the $2.68 consensus by -11.3% due to a large unrealized gain on strategic investments inflating GAAP results. The company guided Q3 revenue to $8.95B ±$500M and non-GAAP EPS to $3.36 ±$0.20, implying strong sequential growth, and raised its dividend by 15%. The headline EPS miss on the Street-followed non-GAAP metric is the key negative, partially offset by record revenue, strong guidance, and AI-driven demand commentary.
Key Financial Metrics
Key Facts
- Record Q2 FY2026 revenue of $7.91B, up 11% YoY from $7.10B
- Non-GAAP diluted EPS of $2.86 missed consensus of $2.68 by -11.3%
- GAAP diluted EPS of $3.51 (record), up 33% YoY, boosted by $685M unrealized gain on strategic investments
- Q3 FY2026 guidance: revenue $8.95B ±$500M and non-GAAP EPS $3.36 ±$0.20
- Semiconductor Systems revenue $5.965B (+10.4% YoY), AGS revenue $1.665B (+17.3% YoY)
- Operating cash flow $845M; free cash flow $210M, down 80% YoY due to higher capex
- Dividend raised 15% to $0.53/share; $400M in share repurchases during the quarter
- CEO expects semiconductor equipment business to grow >30% in calendar 2026
Financial Impact
Non-GAAP EPS miss of -11.3% vs consensus ($2.86 actual vs $2.68 estimate); revenue beat of +2.9% vs $7.69B consensus ($7.91B actual)
Risk Factors
- Non-GAAP EPS miss of -11.3% may trigger negative analyst revisions and short-term selling pressure
- Free cash flow fell 80% YoY to $210M due to elevated capex ($635M) and working capital build
- Guidance midpoint implies non-GAAP EPS of $3.36, which is above the prior consensus of $2.68 for Q3 — execution risk on supply chain readiness
- China revenue concentration at 27% of total exposes to geopolitical/tariff risks
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 1 press release from GlobeNewswire.
| Document | Accession Number |
|---|---|
| PRESS-RELEASE Data (Synthetic) | press-3295316 |
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Jun 17, 2026 15w ago | Insider Cluster | $617.11 $424.21 | ▼ −31.26% | ▼ −33.15% | $529.30 (−14.23%) |
Jun 17, 2026 15w ago | Insider Cluster | $617.11 $424.21 | ▼ −31.26% | ▼ −33.15% | $529.30 (−14.23%) |
Jun 17, 2026 15w ago | Insider Cluster | $617.11 $424.21 | ▼ −31.26% | ▼ −33.15% | $529.30 (−14.23%) |
Jun 16, 2026 15w ago | Press Release | $568.23 $454.01 | ▼ −20.10% | ▼ −21.10% | $529.30 (−6.85%) |
Jun 9, 2026 16w ago | Press Release | $499.21 $438.46 | ▼ −12.17% | ▼ −15.98% | $529.30 (+6.03%) |
Jun 5, 2026 16w ago | Insider Cluster | $492.17 $441.69 | ▼ −10.26% | ▼ −13.31% | $529.30 (+7.54%) |
May 28, 2026 18w ago | Insider Cluster | $450.23 $484.19 | ▲ +7.54% | ▲ +6.62% | $529.30 (+17.56%) |
May 18, 2026 19w ago | ANALYST-DOWNGRADE | $413.27 $547.66 | ▼ −32.52% | ▼ −27.94% | $529.30 (−28.08%) |
May 14, 2026 20w ago | 8-K | $435.77 $525.02 | ▲ +20.48% | ▲ +16.24% | $529.30 (+21.46%) |
May 14, 2026 20w ago | Press Release | $435.77 $525.02 | ▼ −20.48% | ▼ −16.24% | $529.30 (−21.46%) |
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