Zacks Investment Research
18 May 2026, 16:55 UTC · 3d ago
Source · https://www.zacks.com/stock/news/2922779/applied-materials-margin-reaches-historic-high-is-it-sustainable?cid=CS-STOCKNEWSAPI-FT-analyst_blog|quick_take-2922779
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Applied Materials (AMAT) achieved a non-GAAP gross margin of 50% in Q2 fiscal 2026, its highest level in over 25 years. — Record-breaking margins indicate strong pricing power and operational efficiency, signaling high profitability to investors.
+0.60AMAT management expects leading-edge foundry-logic, DRAM, and advanced packaging to drive over 80% of wafer fab equipment spending growth in 2026. — This provides a strong forward-looking growth catalyst tied to the secular AI trend.
+0.50Lam Research (LRCX) secured multiple critical etch wins at a major DRAM manufacturer for its new Akara etch system supporting 3D DRAM. — Specific product wins at major customers validate technology leadership and suggest near-term revenue growth.
+0.40Applied Global Services (AGS) reported record revenue growth of 17% year over year. — Strong growth in recurring service revenue provides a stabilizing floor for earnings regardless of equipment cycle volatility.
+0.30Applied Materials faces ongoing stiff competition from other wafer equipment manufacturers. — Competitive pressure serves as a headwind that could limit future market share gains or pricing power.
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Achieved highest gross margin in over 25 years due to strong AI demand and strategic positioning.
Secured multiple critical etch wins at a major DRAM manufacturer with its new Akara system.
