Applied Materials Sees 68.2% Q4 Display Rebound, Forecasts Back‐End Loaded FY26
Applied Materials' Display segment posted fiscal Q4 revenue growth of 68.2%, driven by higher pricing, advanced systems and OLED demand. Management expects FY26 results to be back‐end loaded, with three soft quarters followed by strong Q4 and sees growth accelerating into FY27 led by rising chip complexity and recurring services.
1. Cramer Highlights Applied Materials’ Market Position
On CNBC’s Stop Trading, Jim Cramer pointed to Applied Materials’ leading role in the semiconductor equipment sector, noting that the company’s extensive wafer fabrication tools and growing presence in advanced packaging give it a strategic advantage. Cramer stressed that investors should watch for order momentum in 300mm deposition systems and the company’s ability to pass through higher component costs, as these factors will influence near-term profitability and cash flow generation.
2. Chip Complexity Drives Recurring Revenue Growth
Applied Materials continues to benefit from increasing chip design complexity, which translates into higher maintenance contracts and service upgrades. The Applied Global Services (AGS) division delivered $4.8 billion in revenue last fiscal year, representing a 12% year-over-year increase, and now contributes roughly 40% of total company revenue. Management emphasized that customers’ ongoing need for cycle time improvement and yield enhancement will fuel AGS growth through multi-year support agreements.
3. Display Segment Rebounds on OLED and Advanced Systems
Fiscal 2025 Q4 revenues in the display business surged by 68.2% year-over-year as strong demand for advanced OLED deposition and etch tools lifted segment margins by 650 basis points. Applied Materials secured several large orders from Asian panel makers for its new ArF immersion lithography tools designed for ultra-high-resolution displays, positioning the company to capture share in both premium television and emerging AR/VR markets.
4. Back-End Loaded Outlook with Acceleration into FY27
Management and consensus forecasts indicate a soft first three quarters of fiscal 2026 as customers digest recent capacity expansions, followed by a robust Q4 driven by AI-related capex. Analysts expect overall revenue growth to reaccelerate in fiscal 2027, with street estimates projecting high-teens percentage gains as new logic node transitions and memory upgrades drive fresh equipment spending. Applied Materials’ strong balance sheet, with over $6 billion in cash and equivalents and a net debt-to-EBITDA ratio under 0.2x, underpins its ability to fund R&D and return capital via dividends and share repurchases.