AI Takeaway
AMAT reported Q1 FY2026 revenue of $7.01B (down 2.1% YoY) while net income surged 71% to $2.03B, largely driven by a non-operating gain that boosted margins well above operating-level performance.
Revenue
$7.01B
-2.15% YoY
EPS (Basic)
$2.55
++74.66% YoY
Gross Margin
49.0%
++0.20% YoY
Operating Income
$1.83B
-15.82% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Total revenue fell 2.1% YoY to $7.01B in Q1 FY2026 from $7.17B in the prior-year period, suggesting modest softness in semiconductor equipment demand. Cost of revenue declined proportionally (-2.5%), keeping gross margin relatively stable at ~49%.
Source: Source: 10-Q Income Statement Data
Operating income dropped 15.8% YoY to $1.83B, driven primarily by an 8.0% increase in R&D expense to $928M as AMAT continues to invest in next-generation process technologies. SG&A declined 11.0% to $411M, partially offsetting R&D headwinds.
Source: Source: 10-Q Income Statement Data
Net income jumped 71.0% YoY to $2.03B despite lower operating income, implying a significant non-operating gain (e.g., investment income, asset sale, or tax benefit) of approximately $195M above operating income. This divergence between operating and net income warrants investor attention.
Source: Source: 10-Q Income Statement & Ratio Data
2 more insights available
Upgrade to unlockOperating margin contracted sharply by ~4.2 percentage points YoY to 26.1%, driven by accelerating R&D investment (+8.0% YoY) against a backdrop of declining revenue. If revenue growth does not recover, sustained margin compression could weigh on earnings quality.
Source: Source: 10-Q Income Statement & Ratio Data
Unlock 4 more detailed risk analysis
Upgrade to unlockReported EPS of $2.38 versus the $2.25 analyst consensus — a +5.9% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $7.01B | $7.17B | -2.15% |
Cost of Revenue | $3.58B | $3.67B | -2.53% |
Gross Profit | $3.44B | $3.5B | -1.74% |
Operating Income | $1.83B | $2.17B | -15.82% |
Net Income | $2.03B | $1.19B | +70.97% |
EPS (Basic) | $2.55 | $1.46 | +74.66% |
EPS (Diluted) | $2.54 | $1.45 | +75.17% |
R&D Expense | $928M | $859M | +8.03% |
SG&A Expense | $411M | $462M | -11.04% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $37.64B | $33.34B | +12.92% |
Current Assets | $21.05B | $20.69B | +1.72% |
Total Liabilities | $15.93B | $14.71B | +8.25% |
Current Liabilities | $7.75B | $7.74B | +0.22% |
Stockholders' Equity | $21.72B | $18.63B | +16.60% |
Cash & Equivalents | $7.22B | $6.26B | +15.23% |
Long-Term Debt | $6.45B | $5.46B | +18.17% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $1.69B | $925M | +82.27% |
Investing Cash Flow | $-780M | $-897M | +13.04% |
Financing Cash Flow | $-931M | $-1.79B | +47.87% |
Dividends Paid | $365M | $326M | +11.96% |
Share Buybacks | $337M | $1.32B | -74.43% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Gross Margin | 49.0% | 48.8% | +0.20% |
Operating Margin | 26.1% | 30.4% | -4.24% |
Net Margin | 28.9% | — | — |
ROE | 9.3% | — | — |
ROA | 5.4% | — | — |
Current Ratio | $2.715 | — | — |
Debt to Equity | $0.733 | — | — |
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Based on the filing data, AMAT reported diluted EPS of $2.54 in Q1 FY2026, up 75.2% YoY from $1.45, and net income of $2.03B. However, a significant portion of the earnings beat appears driven by non-operating gains rather than core operating performance, as operating income actually fell 15.8% YoY to $1.83B.
The headline story is a 71% surge in net income to $2.03B despite a 2.1% revenue decline to $7.01B, with the gap explained by non-operating gains. Operating margin compressed sharply to 26.1% from 30.4% a year ago due to higher R&D spending, while operating cash flow was a standout at $1.69B (+82.3% YoY).
AMAT's net income of $2.03B exceeded its operating income of $1.83B by approximately $195M, indicating significant non-operating income (such as investment gains, interest income, or a favorable tax item) boosted the bottom line. This divergence means the 71% net income growth does not reflect core business improvement, as operating income actually declined 15.8% YoY.
Key risks inferred from the financial data include operating margin compression (down ~4.2 percentage points YoY to 26.1%), the non-recurring nature of non-operating gains that inflated net income, and an 18.2% increase in long-term debt to $6.45B. Additionally, share buybacks fell sharply by 74.4% YoY to $337M, signaling a potential shift in capital allocation priorities.
AMAT's balance sheet remains solid with $7.22B in cash, a current ratio of 2.71, and stockholders' equity of $21.7B (+16.6% YoY). However, long-term debt rose 18.2% YoY to $6.45B, and the debt-to-equity ratio stands at 0.73, reflecting moderate but growing leverage that investors should monitor alongside the operating margin trend.