On August 13, 2026, Applied Materials, Inc. (NASDAQ:AMAT) reported fiscal third-quarter results that topped Wall Street estimates on both revenue and adjusted profit, yet shares fell nearly 5% in after-hours trading and kept sliding into August 14, 2026. Rival Lam Research Corporation (NASDAQ:LRCX) posted its own stronger-than-expected results on July 29, 2026, and saw shares rise 6% instead.
Why This Matters
Both companies are riding the same AI-driven semiconductor equipment boom, supplying the tools chipmakers need to build more advanced chips. Yet investors punished one for its results and rewarded the other.
That raises the real question: is Applied Materials, Inc. (NASDAQ:AMAT) genuinely falling behind Lam Research and its peers, or did investors simply set an unreasonably high bar after both stocks already ran up this year?
The Bull and Bear Case: Applied Materials
Adjusted earnings of $3.50 a share beat the $3.40 analysts expected, and revenue jumped 25% year over year to $9.12 billion, topping the roughly $9 billion Wall Street forecast. CFO Brice Hill said the company is adding manufacturing and customer support teams to double quarterly semiconductor system output by 2028. The firm is already planning its next capacity expansion, “ensuring we have the option to support further increases in demand by 2030.” CEO Gary Dickerson said the company is raising its 2026 semiconductor systems revenue expectations, citing strong leadership positions in DRAM, foundry-logic, and advanced packaging. Applied Materials, Inc. (NASDAQ:AMAT) guided fourth-quarter revenue to about $10.25 billion, above the roughly $9.55 billion analysts expected.
Shares fell nearly 5% in after-hours trading and kept dropping into August 14, 2026, even after beating estimates, because investors wanted clearer proof the company is outpacing rivals rather than falling behind them. Summit Insights Group said Applied’s topline has lagged peers, including ASML and Lam Research Corporation (NASDAQ:LRCX). Morgan Stanley called the quarter “good, but not great,” a distinction the firm said matters this earnings season. Applied Materials, Inc. (NASDAQ:AMAT) trades at 32.14 times forward earnings, a discount to Lam’s 34.59 times, KLA’s 36.85 times, and ASML’s 33.39 times. A $220 million unrealized investment loss also dragged GAAP earnings per share below estimates even as the adjusted figure beat.
The Bull and Bear Case: Lam Research
Lam Research Corporation (NASDAQ:LRCX) forecast first-quarter revenue of $8.10 billion, well above the $7.09 billion analysts expected, and adjusted earnings of $2.15 a share versus the $1.83 Wall Street expected. Shares were up 6% in extended trading. The prior quarter also beat, with revenue of $6.72 billion and adjusted earnings of $1.82 a share, both topping estimates.
Lam counts TSMC and Samsung among its largest customers and in May 2026 opened a research lab in Salzburg, Austria. It is developing panel-level packaging that replaces round silicon wafers with square panels, cutting waste and lowering cost per chip.
However, Lam Research Corporation (NASDAQ:LRCX) has a richer valuation, nearly 35 times forward earnings versus Applied Materials’ 32 times. It leaves less room for error if growth ever disappoints the way it did for its rival this quarter. The Salzburg lab builds on Semsysco, a small Austrian firm Lam acquired in 2022, which means the panel-packaging bet is still an early-stage research effort rather than a revenue-generating technology today.
Insider Monkey’s Hedge Fund Data
Applied Materials, Inc. (NASDAQ:AMAT) was held by 138 hedge funds as of Q1 2026, up from 111. Lam Research Corporation (NASDAQ:LRCX) was held by 123, up from 104.
Conclusion
Applied Materials and Lam Research are both selling into the same AI-driven equipment boom, but this earnings season shows investors are now grading these stocks on relative growth, not just on whether they beat their own estimates.
Overall, hedge funds favor Applied Materials, Inc. (NASDAQ:AMAT) over Lam Research Corporation (NASDAQ:LRCX).
While we acknowledge the risk and potential of AMAT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMAT and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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