6. Applied Materials, Inc. (NASDAQ:AMAT)
Net Profit Margin: 29.31%
Applied Materials, Inc. (NASDAQ:AMAT) is the leader in materials engineering solutions that are at the foundation of virtually every new semiconductor and advanced display in the world.
On June 10, UBS analyst Timothy Arcuri upped the firm’s price recommendation on Applied Materials, Inc. (NASDAQ:AMAT) from $515 to $570, while maintaining a ‘Buy’ rating on the shares.
Similarly, a day later, Barclays also raised its price target on Applied Materials, Inc. (NASDAQ:AMAT) by $90 and kept an ‘Overweight’ rating on the shares (read more details here).
Applied Materials delivered record revenue and earnings, along with its highest gross margin in more than 25 years, in the second quarter of 2026. The company expects its semiconductor equipment business to grow more than 30% and the semiconductor equipment business more than 20% this calendar year. AMAT is targeting a revenue of $8.95 billion, plus or minus $500 million, and adjusted EPS of $3.36, plus or minus $0.20, for the third quarter.
Guinness Global Innovators, an investment management company, stated the following regarding Applied Materials, Inc. (NASDAQ:AMAT) in its Q1 2026 investor letter:
“Applied Materials, Inc. (NASDAQ:AMAT) was the Fund’s top performer in the quarter thanks to an excellent quarterly earnings print. Results and forward commentary pointed to a clear inflection in growth beginning in the second half of FY 2026, highlighting the firm’s significant exposure and leading role in the global AI infrastructure build-out. Applied Materials is the broadest player in front-end, process control and advanced packaging manufacturing and remains well positioned to capture share as chipmakers invest in the full range of semiconductor manufacturing processes. Although headline revenue declined 2.1% year-on-year due to difficult comparators as a result of China normalisation and lumpy orders from Taiwan Semiconductor Manufacturing, this was comfortably ahead of expectations and at the top end of management guidance. Adjusted earnings per share were flat year-on-year but also beat consensus, supported by stronger-than-expected revenue and solid margin execution. Importantly, underlying demand trends were notably stronger than the headline numbers suggest.
Management’s commentary highlighted that AI was approaching a “tipping point” where the race for higher performance and energy efficiency is funnelling unprecedented investment into leading-edge logic, high-bandwidth memory, and advanced packaging – all areas where Applied Materials maintains a process equipment leadership position. Despite management indicating that the first half will remain relatively soft, a meaningful inflection is expected in the second half, with equipment sales projected to grow more than 20% in 2026. This implies the potential for second-half systems revenue growth of roughly 30-40% year-on-year, bringing Applied Materials’ growth outlook broadly in line with peers such as KLA and Lam Research, which are also held within the Fund. Management’s decidedly upbeat tone was underpinned by a sharp acceleration in customer orders, particularly in leading-edge foundry/logic and DRAM, but even more encouraging was the outlook. Capacity is effectively sold out for 2026, providing unusually strong visibility for a business with historically short lead times. To prepare for this demand, the company has nearly doubled its system manufacturing capacity over the past few years and proactively increased its inventory by nearly $500 million year-on-year to support 2026–2027.”
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