AMAT Stock Extends Slide Overnight Despite Beat: Applied Materials’ DRAM Ramp Sends ‘Loudest Demand Signal’

• Advanced packaging revenue is forecast to grow by over 70% in 2026.
• Applied raised its Semiconductor Systems growth forecast for the third time this year.
• Analysts called the capacity expansion a major demand signal but questioned the slower free cash flow growth.

Applied Materials shares extended their post-earnings slide, falling 5% overnight late Thursday even as the chip-equipment giant forecast a “very significant” dynamic random-access memory (DRAM) revenue surge and outlined plans to double manufacturing capacity by 2028. 

AMAT stock fell 5% in after-hours trading on Thursday, extending its decline after dropping more than 2% during the regular session. 

Applied Materials Sees Major DRAM Ramp

DRAM revenue, including high-bandwidth-memory packaging, jumped 52% from the previous year to a record in the third quarter (Q3). “As we look ahead to the second half of the calendar year, we expect a very significant increase in DRAM revenues,” CFO Brice Hill said on the company’s recent earnings call. 

CEO Gary Dickerson said memory demand should keep climbing as AI expands “from training to inference to agentic AI to physical AI.” Applied Materials expects leading-edge logic, DRAM and advanced packaging to generate about 80% of wafer-fabrication-equipment growth in 2026 and 2027.

Advanced-packaging revenue is projected to grow over 70% this year, while process diagnostics and control should expand more than 50%. Applied Materials also lifted its Semiconductor Systems growth outlook for a third time — from above 20% initially to over 30% in May and now higher still. “We raised it to greater than 30%, and we’re saying it’s even higher now,” Hill said.

Applied Materials Plans To Double Output

According to Applied, clean-room availability, not demand, has constrained deliveries. The company said customers are creating additional space and pulling equipment orders forward, while announcing more than 10 new fab projects during the quarter.

Hill said that the company plans to build enough manufacturing capacity to double quarterly system output by 2028 after nearly doubling its manufacturing footprint in recent years. Applied Materials also added more than 1,500 manufacturing and customer-support employees during the quarter. Hill said customers are providing rolling eight-quarter forecasts, with some talks extending to 2030. Dickerson said the increased visibility supports “another strong record year in 2027.”

Applied Materials reported record adjusted earnings of $3.50 per share, beating the $3.39 consensus. Revenue rose 25% to $9.12 billion, topping the $9 billion estimate and climbing a company-record 15% sequentially. The company forecast fourth-quarter adjusted earnings per share (EPS) of $4.02, plus or minus $0.20, versus the $3.68 consensus. Its $10.25 billion revenue midpoint also exceeded Wall Street’s $9.54 billion estimate.

Analysts Turn Bullish On AI Buildout 

Patrick Moorhead, chief analyst at Moor Insights & Strategy, said on X that Applied Materials “beat on every line including the guide,” but the call carried the “real headlines.” He called the capacity-doubling plan “the loudest demand signal a toolmaker can send, louder than any guide.”

Moorhead also highlighted the improving internet of things, communications, automotive, power and sensors (ICAPS) outlook, which shifted to expected growth this year and next. “Ninety days ago that was not the view,” he said. “The soft spot in the story just flipped.”

Additionally, Creative Strategies CEO Ben Bajarin called the call bullish for the AI-compute buildout, citing Applied Materials’ eight-quarter visibility compared with about two months historically. “Time for everyone to up their wafer fabrication equipment (WFE) estimates,” Bajarin said.

However, Moorhead flagged free cash flow as a concern. It rose 14% to $2.33 billion, trailing 25% revenue growth while the capacity expansion still needs funding. After AMAT’s nearly 100% rally, its third guidance increase “met a sell,” he said: “The bar is positioning now.”

How Do Retail Traders Feel About AMAT?

On Stocktwits, retail sentiment for AMAT jumped to ‘extremely bullish’ from ‘neutral’ levels a week ago amid a 2,373% surge in 24-hour message volumes.

One user expects “$AMAT be back over $600 by end of next week. Just like last earnings.”

Another user speculated, “$AMAT energy sector Fridays have not been friendly to semiconductor stocks. I see another 4% dip tomorrow another potentially another 3-4 on Monday.“

AMAT stock has jumped 183% over the past year. 

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