NEW YORK, August 9, 2026, 17:07 EDT — U.S. cash markets did not open.
- Applied Materials rose 6.2% over the week, closing Friday at $539.14.
- Initial consensus estimates project revenue at $9.01 billion with adjusted EPS at $3.39.
- Applied Materials reported free cash flow of $210 million for its fiscal second quarter, accounting for 9.2% of adjusted net income.
Applied Materials, Inc. NASDAQ:AMAT approaches Thursday’s earnings with expectations close to its recent stock gains. Preliminary consensus estimates remain less than 1% above management’s midpoint guidance. Cash conversion is set to be the primary measure.
Shares climbed 2.2% on Friday and advanced 6.2% over the week. The Nasdaq Composite was up 5.2%, and the S&P 500 rose 3.6%.
Analysts’ headline forecasts are already largely aligned with the company’s May guidance.
| Fiscal third-quarter metric | Preliminary consensus | Company guidance | Premium to midpoint | Q3 2025 actual | Implied growth |
|---|---|---|---|---|---|
| Revenue | $9.01 billion | $8.95 billion ± $500 million | 0.7% | $7.302 billion | 23.4% |
| Adjusted EPS | $3.39 | $3.36 ± $0.20 | 0.9% | $2.48 | 36.7% |
The projections are sourced from the most recent weekend preview. Guidance and prior-year figures are provided by the company. A modest headline beat could already be reflected in the share price.
Profits were robust last quarter, while cash generation lagged. Adjusted net income reached $2.286 billion, up 18%. Free cash flow declined by 80% to $210 million.
This amounted to 2.7% of revenue and represented 9.2% of adjusted net income. Operating assets and liabilities used up $1.75 billion. An additional $635 million went toward capital expenditures.
Chief Financial Officer Brice Hill stated, “The growth in AI that Applied has been investing for is now in full force.” He mentioned the company has increased its build plans, inventories, and logistics capacity. Applied Materials
Management linked the cash drag to spending aimed at customer readiness, indicating the weakness could be a matter of timing. Investors will watch for initial indications that the buildup is reversing.
The significance of that test is heightened by the peer comparison.
| Company | Forward P/E | Price/free cash flow | Trailing FCF margin |
|---|---|---|---|
| Applied Materials, Inc. NASDAQ:AMAT | 35.68x | 80.12x | 18.41% |
| Lam Research Corp. NASDAQ:LRCX | 32.92x | 79.65x | 21.05% |
| KLA Corp. NASDAQ:KLAC | 36.36x | 68.71x | 27.74% |
| ASML Holding N.V. NASDAQ:ASML | 30.69x | 57.33x | 28.42% |
Applied posts the smallest trailing free-cash-flow margin in the group, while it trades at the largest cash multiple. Investors are valuing the potential for future cash flow generation over immediate cash returns.
Analysts maintain an overall positive outlook in their recommendations.
| Recommendation | Current | One month ago | Three months ago |
|---|---|---|---|
| Buy | 29 | 29 | 26 |
| Overweight | 4 | 3 | 3 |
| Hold | 7 | 6 | 7 |
| Underweight | 0 | 1 | 0 |
| Sell | 0 | 0 | 0 |
| Consensus | Buy | Buy | Buy |
Out of 40 current analyst ratings, 33 are either Buy or Overweight. The consensus price target averages $641.58, pointing to a potential upside of 19.0%. Price targets vary between $425 and $900.
Stifel Financial Corp. NYSE:SF analysts Brian Chin and Daniela Talio pointed to an ongoing “strong AI expansion/investment phase” within DRAM, advanced logic and packaging. They maintained their Buy rating and $650 price target. Kiplinger
The week will be shaped by three planned events.
| Date and time, ET | Event | Main sensitivity |
|---|---|---|
| Wednesday, August 12, 08:30 | Consumer price data for July | Rates and market valuations |
| Thursday, August 13, 08:30 | Producer price figures for July | Expectations for costs and margins |
| Thursday, August 13, 16:30 | Applied Materials quarterly earnings call | Cash flow and guidance for the fourth quarter |
Both inflations sets release ahead of management’s remarks. As a result, any rate action could impact semiconductor stock values prior to the start of the earnings call.
Risks: Potential share pressure could come from a subdued fourth-quarter outlook, further working-capital headwinds, stricter export license rules or softer demand from customers. With the stock trading at 35.7 times forward earnings, the margin for disappointment is narrow. Applied highlights trade regulations, licensing obligations, and reliance on top customers as key uncertainties.
Following last week’s rally, a modest earnings beat might not be decisive. Stronger guidance and improved cash conversion would be more significant.
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