Analyst Conference Call Summary

semiconductors

conference date: November 13, 2025 @ 1:30 PM Pacific Time
for quarter ending: October 31, 2025 (fourth quarter, Q4 fiscal 2025)

Forward-looking statements

Overview: Slow growth, likely to accelerate due to AI spending.

Basic data (GAAP):

Revenues were $6.80 billion, down 7% sequentially from $7.30 billion and down 3% from $7.05 billion in the year-earlier quarter.

Net income was $1.90 billion, up 7% sequentially from $1.78 billion and up 10% from $1.73 billion year-earlier.

EPS (diluted earnings per share) were $2.38, up 7% sequentially from $2.22 and up 14% from $2.09 year-earlier.

Guidance:

For Q1 fiscal 2026: revenue $6.35 to 7.35 billion. Non-GAAP diluted EPS $1.98 to $2.38.

Conference Highlights:

Gary Dickerson, CEO, said "As AI adoption drives substantial investment in advanced semiconductors and wafer fab equipment, Applied Materials delivered its sixth consecutive year of growth in fiscal 2025. We are well positioned at the highest value technology inflections in the fastest growing areas of the market, enabling us to extend our leadership in leading-edge logic, DRAM and advanced packaging as next-generation technologies ramp in volume production over the coming years." While y/y revenue for Q4 declined, 2025 full year was up 4% from 2024. Growth was slowed by increased trade restrictions. Market mix was unfavorable. China trade was down 25% y/y. Three new products recently introduced: Xtera Epi; Kinex bonding; PROvision eBeam Metrology.

Sees good leading indicators for process equipment demand in 2026. Spending mix should improve to leading-edge foundry logic, DRAM, and advanced packaging, Applied's strengths.

Non-GAAP numbers: net income $1.73 billion, down 13% sequentially from $1.99 billion, and down 10% from $1.92 billion year-earlier. EPS $2.17, down 12% sequentially from $2.48, and down 6% from $2.32 year-earlier.

[note: ICAPS = IoT, Communications, Automotive, Power and Sensors]

Semiconductor Systems sales were $4.76 billion, up sequentially from $4.43 billion, but down from $5.18 billion year-earlier. Revenue by type, as % of total: Foundry, logic and other 65%, DRAM 29%, Flash 6%. Segment operating income was $1.53 billion.

Applied Global Services (AGS) revenue was $1.63 billion, up sequentially from $1.60 billion and down from $1.64 billion year earlier. Non-GAAP operating income was $454 million.

Display segment revenue was $415 million, up sequentially from $263 million and up from $229 million year-earlier. Non-GAAP operating loss was $269 million.

Cash and equivalents (including long-term investments) balance ended at $12.9 billion, up sequentially from $11.1 billion. Cash flow from operating activities was $2.83 billion. Capital expenditures were $0.79 billion. Free cash flow $2.04 billion. $329 million was used for cash dividends. Used $1.44 billion to repurchase shares. Long-term debt was $5.5 billion.

Cost of goods sold was $3.54 billion, leaving gross profit of $3.27 billion. Operating expenses of $1.55 billion consisted of: research and development $917 million; selling and marketing, $212 million; general and administrative $243 million; restructuring $181 million. Leaving income from operations of $1.71 billion. Interest and other income net $555 million. Income tax $370 million.

Full fiscal year 2025 revenue was $28.4 billion, up 4% y/y. Non-GAAP earnings were $9.42, up 9% y/y.

Q&A selective summary:

AI/Nvidia impact? Talking to customers, AI is the biggest focus, so those segments are the growth drivers. We have strong visibility and share. We are confident we can outperform in our leading segments. Advanced factories will start seeing significant ramps in 2026.

Headcount, margins? Normally in Q1 we see a jump in expenses, you will not see that in our projection. We are driving improved productivity within the company.

PVD and other products? Gate all around, backside logic, high-bandwidth memory, we have strong positions in. We see increased demand for integration. Our drawback has been impediments to trade, particularly in China, where we can no longer serve the DRAM market. We do not expect significant new restrictions in China, so we hope to gain share in ICAPS. For PVD we are doing great where we are allowed to compete. It enables low resistance wiring. We see strong demand growth in PVD going forward.

2026 by halves? We think 1H will be basically flat, growth will be in 2H, especially Q4.

Our customer's profitability has improved significantly due to AI investment, our wiring solution is a driver for AI.

China color? $110 million of revenue is in Q1, but then there will be a delay because we were not building when the outlook was uncertain. China is investing heavily in WFE, but the market is hard to forecast.

We have amazing innovation in wiring, and are leading in that field. We have improved resistivity by 50%, for instance.

We have lost share in China overall, due to restrictions on U.S. companies. But we are doing well within the accounts that are accessible to us.

Advanced packaging business? Slowed a bit in 2025 v. 2024. The technologies are changing, we believe it will grow over time. We are number one in high bandwidth memory (HBM). Is a $1.5 billion business today, expect it to become a $3 billion business in a few years. Customers are going to larger packaging sizes to combine more chips into a package.

We had record revenue in Taiwan and Korea.

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