filings.toolsItem 1. Financial Statements
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Item 1. Financial Statements
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| April 26, 2026 | April 27, 2025 | April 26, 2026 | April 27, 2025 | ||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Revenue | $ | 7,910 | $ | 7,100 | $ | 14,922 | $ | 14,266 | |||||||||||||||
| Cost of products sold | 3,963 | 3,615 | 7,540 | 7,285 | |||||||||||||||||||
| Gross profit | 3,947 | 3,485 | 7,382 | 6,981 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research, development and engineering | 1,027 | 893 | 1,955 | 1,752 | |||||||||||||||||||
| Marketing and selling | 233 | 216 | 455 | 422 | |||||||||||||||||||
| General and administrative | 164 | 207 | 353 | 463 | |||||||||||||||||||
| Legal settlement | — | — | 253 | — | |||||||||||||||||||
| Restructuring charges | — | — | 12 | — | |||||||||||||||||||
| Total operating expenses | 1,424 | 1,316 | 3,028 | 2,637 | |||||||||||||||||||
| Income from operations | 2,523 | 2,169 | 4,354 | 4,344 | |||||||||||||||||||
| Interest expense | 69 | 68 | 138 | 132 | |||||||||||||||||||
| Interest and other income (expense), net | 771 | 221 | 1,337 | 229 | |||||||||||||||||||
| Income before income taxes | 3,225 | 2,322 | 5,553 | 4,441 | |||||||||||||||||||
| Provision for income taxes | 419 | 185 | 721 | 1,119 | |||||||||||||||||||
| Net income | $ | 2,806 | $ | 2,137 | $ | 4,832 | $ | 3,322 | |||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 3.53 | $ | 2.64 | $ | 6.09 | $ | 4.10 | |||||||||||||||
| Diluted | $ | 3.51 | $ | 2.63 | $ | 6.05 | $ | 4.08 | |||||||||||||||
| Weighted average number of shares: | |||||||||||||||||||||||
| Basic | 794 | 809 | 794 | 811 | |||||||||||||||||||
| Diluted | 799 | 812 | 799 | 815 |
See accompanying Notes to Consolidated Condensed Financial Statements.
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| April 26, 2026 | April 27, 2025 | April 26, 2026 | April 27, 2025 | ||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Net income | $ | 2,806 | $ | 2,137 | $ | 4,832 | $ | 3,322 | |||||||||||||||
| Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||
| Change in unrealized gain (loss) on available-for-sale investments | (14) | 8 | (19) | 5 | |||||||||||||||||||
| Change in unrealized net loss on derivative instruments | — | (9) | 5 | 19 | |||||||||||||||||||
| Other comprehensive income (loss), net of tax | (14) | (1) | (14) | 24 | |||||||||||||||||||
| Comprehensive income | $ | 2,792 | $ | 2,136 | $ | 4,818 | $ | 3,346 |
See accompanying Notes to Consolidated Condensed Financial Statements.
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In millions)
| April 26, 2026 | October 26, 2025 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 6,301 | $ | 7,241 | |||||||
| Short-term investments | 1,940 | 1,332 | |||||||||
| Accounts receivable, net | 6,372 | 5,185 | |||||||||
| Inventories | 6,343 | 5,915 | |||||||||
| Other current assets | 1,615 | 1,208 | |||||||||
| Total current assets | 22,571 | 20,881 | |||||||||
| Long-term investments | 5,142 | 4,327 | |||||||||
| Property, plant and equipment, net | 5,255 | 4,610 | |||||||||
| Goodwill | 3,824 | 3,707 | |||||||||
| Purchased technology and other intangible assets, net | 330 | 226 | |||||||||
| Deferred income taxes and other assets | 3,164 | 2,548 | |||||||||
| Total assets | $ | 40,286 | $ | 36,299 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Short-term debt | $ | 1,199 | $ | 100 | |||||||
| Accounts payable and accrued expenses | 5,229 | 5,333 | |||||||||
| Contract liabilities | 2,570 | 2,566 | |||||||||
| Total current liabilities | 8,998 | 7,999 | |||||||||
| Long-term debt | 5,256 | 6,455 | |||||||||
| Income taxes payable | 704 | 356 | |||||||||
| Other liabilities | 1,419 | 1,074 | |||||||||
| Total liabilities | 16,377 | 15,884 | |||||||||
| Stockholders’ equity: | |||||||||||
| Common stock | 8 | 8 | |||||||||
| Additional paid-in capital | 10,531 | 10,333 | |||||||||
| Retained earnings | 59,274 | 55,227 | |||||||||
| Treasury stock | (45,780) | (45,043) | |||||||||
| Accumulated other comprehensive loss | (124) | (110) | |||||||||
| Total stockholders’ equity | 23,909 | 20,415 | |||||||||
| Total liabilities and stockholders’ equity | $ | 40,286 | $ | 36,299 |
Amounts as of April 26, 2026 are unaudited. Amounts as of October 26, 2025 are derived from the October 26, 2025 audited consolidated financial statements.
See accompanying Notes to Consolidated Condensed Financial Statements.
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In millions, except per share amounts)
| Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended April 26, 2026 | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of January 25, 2026 | 793 | $ | 8 | $ | 10,311 | $ | 56,888 | 1,242 | $ | (45,380) | $ | (110) | $ | 21,717 | |||||||||||||||||||||||||||||||||
| Net income | — | — | — | 2,806 | — | — | — | 2,806 | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | — | — | — | — | — | (14) | (14) | |||||||||||||||||||||||||||||||||||||||
| Dividends declared ($0.53 per common share) | — | — | — | (420) | — | — | — | (420) | |||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | 169 | — | — | — | — | 169 | |||||||||||||||||||||||||||||||||||||||
| Net issuance under stock plans | 2 | — | 51 | — | — | — | — | 51 | |||||||||||||||||||||||||||||||||||||||
| Common stock repurchases | (1) | — | — | — | 1 | (400) | — | (400) | |||||||||||||||||||||||||||||||||||||||
| Balance as of April 26, 2026 | 794 | $ | 8 | $ | 10,531 | $ | 59,274 | 1,243 | $ | (45,780) | $ | (124) | $ | 23,909 |
| Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended April 26, 2026 | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of October 26, 2025 | 793 | $ | 8 | $ | 10,333 | $ | 55,227 | 1,241 | $ | (45,043) | $ | (110) | $ | 20,415 | |||||||||||||||||||||||||||||||||
| Net income | — | — | — | 4,832 | — | — | — | 4,832 | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | — | — | — | — | — | (14) | (14) | |||||||||||||||||||||||||||||||||||||||
| Dividends declared ($0.99 per common share) | — | — | — | (785) | — | — | — | (785) | |||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | 376 | — | — | — | — | 376 | |||||||||||||||||||||||||||||||||||||||
| Net issuance under stock plans | 3 | — | (178) | — | — | — | — | (178) | |||||||||||||||||||||||||||||||||||||||
| Common stock repurchases | (2) | — | — | — | 2 | (737) | — | (737) | |||||||||||||||||||||||||||||||||||||||
| Balance as of April 26, 2026 | 794 | $ | 8 | $ | 10,531 | $ | 59,274 | 1,243 | $ | (45,780) | $ | (124) | $ | 23,909 |
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)
(In millions, except per share amounts)
| Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended April 27, 2025 | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of January 26, 2025 | 812 | $ | 8 | $ | 9,713 | $ | 50,511 | 1,219 | $ | (41,464) | $ | (143) | $ | 18,625 | |||||||||||||||||||||||||||||||||
| Net income | — | — | — | 2,137 | — | — | — | 2,137 | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | — | — | — | — | — | (1) | (1) | |||||||||||||||||||||||||||||||||||||||
| Dividends declared ($0.46 per common share) | — | — | — | (368) | — | — | — | (368) | |||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | 159 | — | — | — | — | 159 | |||||||||||||||||||||||||||||||||||||||
| Net issuance under stock plans | 1 | — | 94 | — | — | — | — | 94 | |||||||||||||||||||||||||||||||||||||||
| Common stock repurchases | (11) | — | — | — | 11 | (1,685) | — | (1,685) | |||||||||||||||||||||||||||||||||||||||
| Balance as of April 27, 2025 | 802 | $ | 8 | $ | 9,966 | $ | 52,280 | 1,230 | $ | (43,149) | $ | (144) | $ | 18,961 |
| Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total | ||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended April 27, 2025 | Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance as of October 27, 2024 | 818 | $ | 8 | $ | 9,660 | $ | 49,651 | 1,211 | $ | (40,150) | $ | (168) | $ | 19,001 | |||||||||||||||||||||||||||||||||
| Net income | — | — | — | 3,322 | — | — | — | 3,322 | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | — | — | — | — | — | — | 24 | 24 | |||||||||||||||||||||||||||||||||||||||
| Dividends declared ($0.86 per common share) | — | — | — | (693) | — | — | — | (693) | |||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | 354 | — | — | — | — | 354 | |||||||||||||||||||||||||||||||||||||||
| Net issuance under stock plans | 3 | — | (48) | — | — | — | — | (48) | |||||||||||||||||||||||||||||||||||||||
| Common stock repurchases | (19) | — | — | — | 19 | (2,999) | — | (2,999) | |||||||||||||||||||||||||||||||||||||||
| Balance as of April 27, 2025 | 802 | $ | 8 | $ | 9,966 | $ | 52,280 | 1,230 | $ | (43,149) | $ | (144) | $ | 18,961 |
See accompanying Notes to Consolidated Condensed Financial Statements.
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
**(**In millions)
| Six Months Ended | |||||||||||
| April 26, 2026 | April 27, 2025 | ||||||||||
| (Unaudited) | |||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 4,832 | $ | 3,322 | |||||||
| Adjustments required to reconcile net income to cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 262 | 208 | |||||||||
| Restructuring charges | 12 | — | |||||||||
| (Gain) / loss and impairment on investments | (1,138) | 24 | |||||||||
| Share-based compensation | 376 | 354 | |||||||||
| Deferred income taxes | 74 | 672 | |||||||||
| Other | 4 | (38) | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | (1,188) | (953) | |||||||||
| Inventories | (401) | (235) | |||||||||
| Other current and non-current assets | (394) | (30) | |||||||||
| Accounts payable and accrued expenses | (221) | (92) | |||||||||
| Contract liabilities | (3) | (358) | |||||||||
| Income taxes payable | 325 | (373) | |||||||||
| Other liabilities | (9) | (5) | |||||||||
| Cash provided by operating activities | 2,531 | 2,496 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | (1,281) | (891) | |||||||||
| Cash paid for acquisitions, net of cash acquired | (175) | (29) | |||||||||
| Proceeds from asset sale | 6 | 33 | |||||||||
| Proceeds from sales and maturities of investments | 3,234 | 3,144 | |||||||||
| Purchases of investments | (3,523) | (2,933) | |||||||||
| Cash used in investing activities | (1,739) | (676) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from issuance of commercial paper | 300 | 300 | |||||||||
| Repayments of commercial paper | (400) | (300) | |||||||||
| Proceeds from common stock issuances | 131 | 129 | |||||||||
| Common stock repurchases | (737) | (2,988) | |||||||||
| Tax withholding payments for vested equity awards | (309) | (177) | |||||||||
| Payments of dividends to stockholders | (730) | (651) | |||||||||
| Payments of debt issuance costs | — | (2) | |||||||||
| Cash used in financing activities | (1,745) | (3,689) | |||||||||
| Increase (decrease) in cash, cash equivalents and restricted cash equivalents | (953) | (1,869) | |||||||||
| Cash, cash equivalents and restricted cash equivalents — beginning of period | 7,312 | 8,113 | |||||||||
| Cash, cash equivalents and restricted cash equivalents — end of period | $ | 6,359 | $ | 6,244 | |||||||
| Reconciliation of cash, cash equivalents and restricted cash equivalents | |||||||||||
| Cash and cash equivalents | $ | 6,301 | $ | 6,169 | |||||||
| Restricted cash equivalents included in deferred income taxes and other assets | 58 | 75 | |||||||||
| Total cash, cash equivalents and restricted cash equivalents | $ | 6,359 | $ | 6,244 | |||||||
APPLIED MATERIALS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Continued)
**(**In millions)
| Six Months Ended | |||||||||||
| April 26, 2026 | April 27, 2025 | ||||||||||
| (Unaudited) | |||||||||||
| Supplemental cash flow information: | |||||||||||
| Cash payments for income taxes | $ | 650 | $ | 833 | |||||||
| Cash refunds from income taxes | $ | 16 | $ | 75 | |||||||
| Cash payments for interest | $ | 119 | $ | 120 |
See accompanying Notes to Consolidated Condensed Financial Statements.
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note 1 Basis of Presentation and Recently Adopted Accounting Standards
Basis of Presentation
In the opinion of our management, the unaudited interim consolidated condensed financial statements of Applied Materials, Inc. and its subsidiaries (we, us, and our) included herein have been prepared on a basis consistent with the October 26, 2025 audited consolidated financial statements and include all material adjustments, consisting of normal recurring adjustments, necessary to fairly state the information set forth therein. These unaudited interim consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended October 26, 2025 (2025 Form 10-K).
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates. Our results of operations for the three and six months ended April 26, 2026 are not necessarily indicative of future operating results. Our fiscal year ends on the last Sunday in October of each year. Fiscal 2026 and 2025 contain 52 weeks each and the first six months of fiscal 2026 and 2025 each contained 26 weeks.
Certain prior-year amounts have been reclassified to conform to current-year presentation.
Note 2 Earnings Per Share
Basic earnings per share is determined using the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined using the weighted average number of common shares and potential common shares (representing the dilutive effect of restricted stock units and employees’ stock purchase plan shares) outstanding during the period. Our net income has not been adjusted for any period presented for purposes of computing basic or diluted earnings per share due to our non-complex capital structure.
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| April 26, 2026 | April 27, 2025 | April 26, 2026 | April 27, 2025 | ||||||||||||||||||||
| (In millions, except per share amounts) | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income | $ | 2,806 | $ | 2,137 | $ | 4,832 | $ | 3,322 | |||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted average common shares outstanding | 794 | 809 | 794 | 811 | |||||||||||||||||||
| Effect of weighted dilutive restricted stock units and employees’ stock purchase plan shares | 5 | 3 | 5 | 4 | |||||||||||||||||||
| Denominator for diluted earnings per share | 799 | 812 | 799 | 815 | |||||||||||||||||||
| Basic earnings per share | $ | 3.53 | $ | 2.64 | $ | 6.09 | $ | 4.10 | |||||||||||||||
| Diluted earnings per share | $ | 3.51 | $ | 2.63 | $ | 6.05 | $ | 4.08 | |||||||||||||||
| Potentially weighted dilutive securities | — | — | — | — |
Excluded from the calculation of diluted earnings per share are securities attributable to outstanding restricted stock units where the combined exercise price and average unamortized fair value are greater than the average market price of our common stock, and therefore their inclusion would be anti-dilutive.
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
Note 3 Cash, Cash Equivalents and Investments
Summary of Cash, Cash Equivalents and Investments
The following tables summarize our cash, cash equivalents and investments by security type:
| April 26, 2026 | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
| Cash | $ | 1,497 | $ | — | $ | — | $ | 1,497 | |||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| Money market funds* | 2,428 | — | — | 2,428 | |||||||||||||||||||
| Bank certificates of deposit and time deposits | 180 | — | — | 180 | |||||||||||||||||||
| Municipal securities | 5 | — | — | 5 | |||||||||||||||||||
| Commercial paper, corporate bonds and medium-term notes | 2,191 | — | — | 2,191 | |||||||||||||||||||
| Total cash equivalents | 4,804 | — | — | 4,804 | |||||||||||||||||||
| Total cash and cash equivalents | $ | 6,301 | $ | — | $ | — | $ | 6,301 | |||||||||||||||
| Short-term and long-term investments: | |||||||||||||||||||||||
| Bank certificates of deposit and time deposits | $ | 6 | $ | — | $ | — | $ | 6 | |||||||||||||||
| U.S. Treasury and agency securities | 2,247 | — | 4 | 2,243 | |||||||||||||||||||
| Municipal securities | 477 | 2 | 1 | 478 | |||||||||||||||||||
| Commercial paper, corporate bonds and medium-term notes | 1,174 | 3 | 1 | 1,176 | |||||||||||||||||||
| Asset-backed and mortgage-backed securities | 553 | 1 | 2 | 552 | |||||||||||||||||||
| Total fixed income securities | 4,457 | 6 | 8 | 4,455 | |||||||||||||||||||
| Publicly traded equity securities | 965 | 1,284 | 1 | 2,248 | |||||||||||||||||||
| Equity investments in privately held companies | 348 | 107 | 76 | 379 | |||||||||||||||||||
| Total equity investments | 1,313 | 1,391 | 77 | 2,627 | |||||||||||||||||||
| Total short-term and long-term investments | $ | 5,770 | $ | 1,397 | $ | 85 | $ | 7,082 | |||||||||||||||
| Total cash, cash equivalents and investments | $ | 12,071 | $ | 1,397 | $ | 85 | $ | 13,383 |
*Excludes $58 million of restricted cash equivalents invested in money market funds related to deferred compensation plans.
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
| October 26, 2025 | Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
| Cash | $ | 1,419 | $ | — | $ | — | $ | 1,419 | |||||||||||||||
| Cash equivalents: | |||||||||||||||||||||||
| Money market funds* | 2,193 | — | — | 2,193 | |||||||||||||||||||
| Bank certificates of deposit and time deposits | 180 | — | — | 180 | |||||||||||||||||||
| U.S. Treasury and agency securities | 1,196 | — | — | 1,196 | |||||||||||||||||||
| Municipal securities | 5 | — | — | 5 | |||||||||||||||||||
| Commercial paper, corporate bonds and medium-term notes | 2,248 | — | — | 2,248 | |||||||||||||||||||
| Total cash equivalents | 5,822 | — | — | 5,822 | |||||||||||||||||||
| Total cash and cash equivalents | $ | 7,241 | $ | — | $ | — | $ | 7,241 | |||||||||||||||
| Short-term and long-term investments: | |||||||||||||||||||||||
| Bank certificates of deposit and time deposits | $ | 4 | $ | — | $ | — | $ | 4 | |||||||||||||||
| U.S. Treasury and agency securities | 1,229 | 3 | — | 1,232 | |||||||||||||||||||
| Non-U.S. government securities** | 5 | — | — | 5 | |||||||||||||||||||
| Municipal securities | 463 | 5 | — | 468 | |||||||||||||||||||
| Commercial paper, corporate bonds and medium-term notes | 848 | 6 | — | 854 | |||||||||||||||||||
| Asset-backed and mortgage-backed securities | 614 | 4 | 2 | 616 | |||||||||||||||||||
| Total fixed income securities | 3,163 | 18 | 2 | 3,179 | |||||||||||||||||||
| Publicly traded equity securities | 1,288 | 824 | 2 | 2,110 | |||||||||||||||||||
| Equity investments in privately held companies | 342 | 74 | 46 | 370 | |||||||||||||||||||
| Total equity investments | 1,630 | 898 | 48 | 2,480 | |||||||||||||||||||
| Total short-term and long-term investments | $ | 4,793 | $ | 916 | $ | 50 | $ | 5,659 | |||||||||||||||
| Total cash, cash equivalents and investments | $ | 12,034 | $ | 916 | $ | 50 | $ | 12,900 |
*Excludes $71 million of restricted cash equivalents invested in money market funds related to deferred compensation plans.
**Includes Canadian provincial government debt.
During the three months ended April 26, 2026 and April 27, 2025, interest income from our cash, cash equivalents and fixed income securities was $96 million and $101 million, respectively.
During the six months ended April 26, 2026 and April 27, 2025, interest income from our cash, cash equivalents and fixed income securities was $193 million and $217 million, respectively.
Maturities of Investments
The following table summarizes the contractual maturities of our investments as of April 26, 2026:
| Cost | Estimated Fair Value | ||||||||||
| (In millions) | |||||||||||
| Due in one year or less | $ | 1,911 | $ | 1,911 | |||||||
| Due after one through five years | 1,993 | 1,992 | |||||||||
| No single maturity date* | 1,866 | 3,179 | |||||||||
| Total | $ | 5,770 | $ | 7,082 |
*Securities with no single maturity date include publicly traded and privately held equity securities and asset-backed and mortgage-backed securities.
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
Gains and Losses on Investments
During the three and six months ended April 26, 2026 and April 27, 2025, gross realized gains and losses on our fixed income portfolio were not material.
As of April 26, 2026 and October 26, 2025, gross unrealized losses related to our fixed income portfolio were not material. We regularly review our fixed income portfolio to identify and evaluate investments that have indications of possible impairment from credit losses or other factors. Factors considered in determining whether an unrealized loss is considered to be a credit loss include: the significance of the decline in value compared to the cost basis; the financial condition, credit quality and near-term prospects of the investee; and whether it is more likely than not that we will be required to sell the security prior to recovery. Credit losses related to available-for-sale debt securities are recorded as an allowance for credit losses through interest and other income (expense), net. Any additional changes in fair value that are not related to credit losses are recognized in accumulated other comprehensive income (loss) (AOCI). During the three and six months ended April 26, 2026 and April 27, 2025, we did not recognize material credit losses and the ending allowance for credit losses was not material to our fixed income portfolio.
The components of gain (loss) on equity investments recognized in the Consolidated Condensed Statements of Operations for the three and six months ended April 26, 2026 and April 27, 2025 were as follows:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| April 26, 2026 | April 27, 2025 | April 26, 2026 | April 27, 2025 | ||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
| Publicly traded equity securities | |||||||||||||||||||||||
| Unrealized gain | $ | 673 | $ | 110 | $ | 1,157 | $ | 113 | |||||||||||||||
| Unrealized loss | — | (28) | (16) | (139) | |||||||||||||||||||
| Realized gain on sales and dividends | 1 | 22 | 5 | 25 | |||||||||||||||||||
| Realized loss on sales or impairment | (13) | — | (15) | — | |||||||||||||||||||
| Equity investments in privately held companies | |||||||||||||||||||||||
| Unrealized gain | 17 | — | 35 | 7 | |||||||||||||||||||
| Unrealized loss | (5) | (2) | (7) | (7) | |||||||||||||||||||
| Realized gain on sales and dividends | 3 | 1 | 7 | 7 | |||||||||||||||||||
| Realized loss on sales or impairment | (6) | (5) | (26) | (5) | |||||||||||||||||||
| Total gain (loss) on equity investments, net | $ | 670 | $ | 98 | $ | 1,140 | $ | 1 |
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
Note 4 Fair Value Measurements
Assets Measured at Fair Value on a Recurring Basis
The following table presents our fair value hierarchy for our financial assets (excluding cash balances) measured at fair value on a recurring basis:
| April 26, 2026 | October 26, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | ||||||||||||||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||||||
| Available-for-sale debt security investments | |||||||||||||||||||||||||||||||||||||||||||||||
| Money market funds* | $ | 2,486 | $ | — | $ | 2,486 | $ | 2,264 | $ | — | $ | 2,264 | |||||||||||||||||||||||||||||||||||
| Bank certificates of deposit and time deposits | — | 186 | 186 | — | 184 | 184 | |||||||||||||||||||||||||||||||||||||||||
| U.S. Treasury and agency securities | 981 | 1,262 | 2,243 | 2,109 | 319 | 2,428 | |||||||||||||||||||||||||||||||||||||||||
| Non-U.S. government securities | — | — | — | — | 5 | 5 | |||||||||||||||||||||||||||||||||||||||||
| Municipal securities | — | 483 | 483 | — | 473 | 473 | |||||||||||||||||||||||||||||||||||||||||
| Commercial paper, corporate bonds and medium-term notes | — | 3,367 | 3,367 | — | 3,102 | 3,102 | |||||||||||||||||||||||||||||||||||||||||
| Asset-backed and mortgage-backed securities | — | 552 | 552 | — | 616 | 616 | |||||||||||||||||||||||||||||||||||||||||
| Total available-for-sale debt security investments | $ | 3,467 | $ | 5,850 | $ | 9,317 | $ | 4,373 | $ | 4,699 | $ | 9,072 | |||||||||||||||||||||||||||||||||||
| Equity investments with readily determinable values | |||||||||||||||||||||||||||||||||||||||||||||||
| Publicly traded equity securities | $ | 2,248 | $ | — | $ | 2,248 | $ | 2,110 | $ | — | $ | 2,110 | |||||||||||||||||||||||||||||||||||
| Total equity investments with readily determinable values | $ | 2,248 | $ | — | $ | 2,248 | $ | 2,110 | $ | — | $ | 2,110 | |||||||||||||||||||||||||||||||||||
| Total | $ | 5,715 | $ | 5,850 | $ | 11,565 | $ | 6,483 | $ | 4,699 | $ | 11,182 | |||||||||||||||||||||||||||||||||||
*Amounts as of April 26, 2026 and October 26, 2025 include $58 million and $71 million, respectively, invested in money market funds related to deferred compensation plans. Due to restrictions on the distribution of these funds, they are classified as restricted cash equivalents and are included in deferred income taxes and other assets in the Consolidated Condensed Balance Sheets.
As of April 26, 2026 and October 26, 2025, available-for-sale, short-term and long-term investments not recognized at fair value based upon observable inputs or quoted prices were not material.
We did not have any financial assets measured at fair value on a recurring basis within Level 3 fair value measurements as of April 26, 2026 or October 26, 2025.
Assets and Liabilities without Readily Determinable Values Measured on a Non-recurring Basis
Our equity investments without readily determinable values consist of equity investments in privately held companies. We elected the measurement alternative, defined as cost, less impairments, adjusted for subsequent observable price changes on a prospective basis for certain equity investments without readily determinable fair values and are required to account for any subsequent observable changes in fair value within the statements of operations. These investments are classified as Level 3 within the fair value hierarchy and periodically assessed for impairment when an event or circumstance indicates that a decline in value may have occurred. Impairment losses on equity investments in privately held companies, included in the above fair value hierarchy table, were not material during the three and six months ended April 26, 2026 and April 27, 2025. These impairment losses are included in interest and other income (expense), net in the Consolidated Condensed Statements of Operations.
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
Other
The carrying amounts of our financial instruments, including cash and cash equivalents, restricted cash equivalents, accounts receivable, commercial paper notes, and accounts payable and accrued expenses, approximate fair value due to their short maturities. As of April 26, 2026, the aggregate principal amount of long-term senior unsecured notes issued by us was $5.3 billion, and their estimated fair value, excluding associated interest rate swaps we entered into in the first quarter of fiscal 2026, was $4.9 billion. See Note 5 of the Notes to the Consolidated Condensed Financial Statements for information on our interest rate swaps. As of October 26, 2025, the aggregate principal amount of long-term senior unsecured notes was $6.5 billion and the estimated fair value was $6.2 billion. The estimated fair value of long-term senior unsecured notes issued by us is determined by Level 2 inputs and is based primarily on quoted market prices for the same or similar issues. See Note 9 of the Notes to the Consolidated Condensed Financial Statements for additional information on our senior unsecured notes.
Note 5 Derivative Instruments and Hedging Activities
Derivative Financial Instruments
We conduct business in a number of foreign countries, with certain transactions denominated in local currencies, such as the Japanese yen, Israeli shekel, euro and Taiwanese dollar. We use derivative financial instruments, such as foreign currency forward and option contracts, to hedge certain forecasted foreign currency denominated transactions expected to occur typically within the next 24 months. The purpose of our foreign currency management is to mitigate the effect of exchange rate fluctuations on certain foreign currency denominated revenues, costs and eventual cash flows. The terms of currency instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged.
We do not use derivative financial instruments for trading or speculative purposes. Derivative instruments and hedging activities, including foreign exchange and interest rate contracts, are recognized on the balance sheet at fair value. Changes in the fair value of derivatives that do not qualify for hedge accounting treatment are recognized currently in earnings. All of our derivative financial instruments are recorded at their fair value in other current assets, accounts payable and accrued expenses, or long-term debt.
Hedges related to anticipated transactions are designated and documented at the inception of the hedge as cash flow hedges and foreign exchange derivatives are typically entered into once per month. Cash flow hedges are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive income (loss) (AOCI) in stockholders’ equity and is reclassified into earnings when the hedged transaction affects earnings. The majority of the after-tax net income or loss related to foreign exchange derivative instruments included in AOCI as of April 26, 2026 is expected to be reclassified into earnings within 12 months. Changes in fair value caused by changes in time value of option contracts designated as cash flow hedges are excluded from the assessment of effectiveness. The initial value of this excluded component is amortized on a straight-line basis over the life of the hedging instrument and recognized in the financial statement line item to which the hedge relates. If the transaction being hedged is probable not to occur, we recognize the gain or loss on the associated financial instrument in the Consolidated Condensed Statement of Operations. The amount recognized due to discontinuance of cash flow hedges that were probable of not occurring by the end of the originally specified time period was not material for the three and six months ended April 26, 2026 and April 27, 2025.
Foreign currency forward contracts are generally used to hedge certain foreign currency denominated assets or liabilities. Accordingly, changes in the fair value of these hedges are recorded in the Consolidated Condensed Statement of Operations to offset the changes in the fair value of the assets or liabilities being hedged.
We also use interest rate swap derivatives to partially offset our business exposure to interest risk associated with our outstanding fixed rate senior unsecured notes. These interest rate swaps are designated as fair value hedges and used to offset changes in the fair value of certain unsecured senior notes attributable to changes in the benchmark interest rate. We reflect the interest settlement associated with the interest rate swap as cash flows from operating activities in the Consolidated Statements of Cash Flows. During the six months ended April 26, 2026, we entered into a series of interest rate swaps with the aggregate notional amount of $400 million. We record changes in fair value on the swaps in our Consolidated Condensed Statements of Operations with a corresponding offset to the value of the hedged senior unsecured notes. See Note 9 of the Notes to the Consolidated Condensed Financial Statements for additional discussion of our senior unsecured notes.
As of April 26, 2026 and October 26, 2025, the total outstanding notional amounts of foreign exchange contracts were $2.9 billion and $2.3 billion, respectively. The fair values of foreign exchange derivative instruments as of April 26, 2026 and October 26, 2025 were not material.
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
The gain (loss) on derivatives in cash flow hedging relationships recognized in AOCI for derivatives designated as hedging instruments were not material for the three and six months ended April 26, 2026 and April 27, 2025.
The effects of derivative instruments, both those designated and not designated as cash flow and fair value hedges, on the Consolidated Condensed Statements of Operations were not material for the three and six months ended April 26, 2026 and April 27, 2025.
Credit Risk Contingent Features
If our credit rating were to fall below investment grade, we would be in violation of credit risk contingent provisions of the derivative instruments discussed above, and certain counterparties to the derivative instruments could request immediate payment on derivative instruments in net liability positions. The aggregate fair value of all derivative instruments with credit-risk related contingent features that were in a net liability position was not material as of April 26, 2026.
Entering into derivative contracts with banks exposes us to credit-related losses in the event of the banks’ nonperformance. However, our exposure is not considered material.
Note 6 Accounts Receivable, Net
We maintain an allowance for credit losses for estimated losses resulting from the inability of our customers to make required payments. This allowance is based on historical experience, credit evaluations, specific customer collection history and any customer-specific issues we have identified. Changes in circumstances, such as an unexpected material adverse change in a major customer’s ability to meet its financial obligation to us or its payment trends, may require us to further adjust our estimates of the recoverability of amounts due to us. Bad debt expense and any reversals are recorded in marketing and selling expenses in the Consolidated Condensed Statements of Operations.
The balances of allowance for credit losses were not material as of April 26, 2026 and October 26, 2025, and the changes in allowance for credit losses were not material for the three and six months ended April 26, 2026 and April 27, 2025.
We sell our products principally to manufacturers within the semiconductor industry. While we believe that our allowance for credit losses is adequate and represents our best estimate as of April 26, 2026, we continue to closely monitor customer liquidity and industry and economic conditions, which may result in changes to our estimates.
Note 7 Contract Balances and Performance Obligations
Contract Assets and Liabilities
Contract assets primarily result from receivables for goods transferred to customers where payment is conditional upon technical sign off and not just the passage of time. Contract liabilities consist of unsatisfied performance obligations related to advance payments received and billings in excess of revenue recognized. Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period.
Contract assets are generally classified as current and are included in Other Current Assets in the Consolidated Condensed Balance Sheets. Contract liabilities are classified as current or non-current based on the timing of when performance obligations will be satisfied and associated revenue is expected to be recognized.
Contract balances at the end of each reporting period were as follows:
| April 26, 2026 | October 26, 2025 | ||||||||||
| (In millions) | |||||||||||
| Contract assets | $ | 221 | $ | 281 | |||||||
| Contract liabilities | $ | 2,570 | $ | 2,566 |
The decrease in contract assets during the six months ended April 26, 2026 was primarily due to a decrease in unsatisfied performance obligations related to goods transferred to customers where payment was conditional upon technical sign off.
During the six months ended April 26, 2026, we recognized revenue of approximately $1.5 billion related to contract liabilities at October 26, 2025. Contract liabilities increased during the six months ended April 26, 2026 due to new billings for products and services for which there were unsatisfied performance obligations to customers and revenue had not yet been recognized as of April 26, 2026, partially offset by revenue recognized related to contract liabilities at October 26, 2025.
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
There were no credit losses recognized on our accounts receivable and contract assets during both the six months ended April 26, 2026 and April 27, 2025.
Performance Obligations
As of April 26, 2026, the amount of remaining unsatisfied performance obligations on contracts, primarily consisting of written purchase orders received from customers, with an original estimated duration of one year or more was approximately $1.2 billion, of which approximately 77% is expected to be recognized within 12 months and the remainder is expected to be recognized within the following 24 months thereafter.
We have elected the available practical expedient to exclude the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less.
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
Note 8 Balance Sheet Detail
| April 26, 2026 | October 26, 2025 | ||||||||||
| (In millions) | |||||||||||
| Inventories | |||||||||||
| Customer service spares | $ | 1,831 | $ | 1,786 | |||||||
| Raw materials | 2,126 | 2,007 | |||||||||
| Work-in-process | 1,109 | 914 | |||||||||
| Finished goods | |||||||||||
| Deferred cost of sales | 288 | 229 | |||||||||
| Evaluation inventory | 450 | 474 | |||||||||
| Manufactured on-hand inventory | 539 | 505 | |||||||||
| Total finished goods | 1,277 | 1,208 | |||||||||
| Total inventories | $ | 6,343 | $ | 5,915 |
| April 26, 2026 | October 26, 2025 | ||||||||||
| (In millions) | |||||||||||
| Other Current Assets | |||||||||||
| Prepaid income taxes and income taxes receivable | $ | 439 | $ | 148 | |||||||
| Prepaid expenses and other | 1,176 | 1,060 | |||||||||
| $ | 1,615 | $ | 1,208 |
| Useful Life | April 26, 2026 | October 26, 2025 | |||||||||||||||
| (In years) | (In millions) | ||||||||||||||||
| Property, Plant and Equipment, Net | |||||||||||||||||
| Land and improvements | $ | 559 | $ | 558 | |||||||||||||
| Buildings and improvements | 3-30 | 3,137 | 2,930 | ||||||||||||||
| Demonstration and manufacturing equipment | 5-8 | 2,858 | 2,708 | ||||||||||||||
| Furniture, fixtures and other equipment | 3-5 | 931 | 855 | ||||||||||||||
| Construction in progress | 1,860 | 1,460 | |||||||||||||||
| Gross property, plant and equipment | 9,345 | 8,511 | |||||||||||||||
| Accumulated depreciation | (4,090) | (3,901) | |||||||||||||||
| $ | 5,255 | $ | 4,610 |
| April 26, 2026 | October 26, 2025 | ||||||||||
| (In millions) | |||||||||||
| Deferred Income Taxes and Other Assets | |||||||||||
| Non-current deferred income taxes | $ | 1,047 | $ | 1,233 | |||||||
| Operating lease right-of-use assets | 820 | 509 | |||||||||
| Income tax receivables and other assets | 1,297 | 806 | |||||||||
| $ | 3,164 | $ | 2,548 |
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
| April 26, 2026 | October 26, 2025 | ||||||||||
| (In millions) | |||||||||||
| Accounts Payable and Accrued Expenses | |||||||||||
| Accounts payable | $ | 2,197 | $ | 1,978 | |||||||
| Compensation and employee benefits | 966 | 1,221 | |||||||||
| Warranty | 326 | 346 | |||||||||
| Dividends payable | 421 | 365 | |||||||||
| Income taxes payable | 357 | 380 | |||||||||
| Operating lease liabilities, current | 114 | 91 | |||||||||
| Restructuring reserve | 23 | 165 | |||||||||
| Other | 825 | 787 | |||||||||
| $ | 5,229 | $ | 5,333 |
| April 26, 2026 | October 26, 2025 | ||||||||||
| (In millions) | |||||||||||
| Other Liabilities | |||||||||||
| Defined and postretirement benefit plans | $ | 148 | $ | 151 | |||||||
| Operating lease liabilities, non-current | 699 | 404 | |||||||||
| Other | 572 | 519 | |||||||||
| $ | 1,419 | $ | 1,074 |
Government Assistance
Capital expenditure related incentives reduced gross property, plant and equipment by $1.6 billion as of April 26, 2026. To the extent the capital expenditure related incentives exceed our applicable income tax liabilities, we are eligible to receive a refund in cash. In our Consolidated Condensed Balance Sheets as of April 26, 2026, we have recorded $1.1 billion of investment tax credits, of which $63 million was recorded in other current assets and will offset fiscal 2026 income tax liabilities, and $1.0 billion was recorded in deferred income taxes and other assets and is expected to be refunded. Contra depreciation expense and operating incentives recorded as a reduction to expense were not material for the three and six months ended April 26, 2026 and April 27, 2025.
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
Note 9 Borrowing Facilities and Debt
Revolving Credit Facilities
In September 2025, we entered into a $2.0 billion 364-day committed revolving credit agreement (364-Day Credit Agreement) with a group of banks. The 364-Day Credit Agreement includes a provision under which we may request an increase in the amount of the facility of up to $1.0 billion for a total commitment of no more than $3.0 billion, subject to the receipt of commitments from one or more lenders for any such increase and other customary conditions. The 364-Day Credit Agreement is scheduled to expire in September 2026, provided, however, if any loans are outstanding on the maturity date, we may convert all or part of such loans to term loans that will mature in September 2027, subject to payment of a fee by us and other customary conditions.
In February 2025, we entered into a $2.0 billion committed revolving credit agreement (Five-Year Credit Agreement) with a group of banks. The Five-Year Credit Agreement includes a provision under which we may request an increase in the amount of the facility of up to $500 million for a total commitment of no more than $2.5 billion, subject to the receipt of commitments from one or more lenders for any such increase and other customary conditions. The Five-Year Credit Agreement is scheduled to expire in February 2030, unless extended as permitted under the terms of the agreement.
Each of the 364-Day Credit Agreement and the Five-Year Credit Agreement provides for unsecured borrowings that bear interest for each advance at one of two rates selected by us, plus an applicable margin, which varies according to our public debt credit ratings.
No amounts were outstanding under the 364-Day Credit Agreement or the Five-Year Credit Agreement as of April 26, 2026 and October 26, 2025.
In addition, we have revolving credit facilities with Japanese banks pursuant to which we may borrow up to approximately $50 million in aggregate at any time. Our ability to borrow under these facilities is subject to bank approval at the time of the borrowing request, and any advances will be at rates indexed to the banks’ prime reference rate denominated in Japanese yen. As of April 26, 2026 and October 26, 2025, no amounts were outstanding under these revolving credit facilities.
Short-term Commercial Paper
We have a short-term commercial paper program under which we may issue unsecured commercial paper notes of up to a total amount of $4.0 billion. The proceeds from the issuances of commercial paper are used for general corporate purposes. As of April 26, 2026, we had no commercial paper outstanding, and as of October 26, 2025, we had $100 million of commercial paper notes outstanding and recorded as short-term debt with a weighted-average interest rate of 4.07% and maturities of 35 days.
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
Senior Unsecured Notes
Debt outstanding as of April 26, 2026 and October 26, 2025 was as follows:
| Principal Amount | |||||||||||||||||||||||
| April 26, 2026 | October 26, 2025 | Effective Interest Rate | Interest Pay Dates | ||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
| Current portion of long-term debt: | |||||||||||||||||||||||
| 3.300% Senior Notes Due 2027 | $ | 1,200 | $ | — | 3.342% | April 1, October 1 | |||||||||||||||||
| Total unamortized debt issuance costs | (1) | — | |||||||||||||||||||||
| Total current portion of long-term debt | $ | 1,199 | $ | — | |||||||||||||||||||
| Long-term debt: | |||||||||||||||||||||||
| 3.300% Senior Notes Due 2027 | $ | — | $ | 1,200 | 3.342% | April 1, October 1 | |||||||||||||||||
| 4.800% Senior Notes Due 2029 | 700 | 700 | 4.844% | June 15, December 15 | |||||||||||||||||||
| 1.750% Senior Notes Due 2030 | 750 | 750 | 1.792% | June 1, December 1 | |||||||||||||||||||
| 4.000% Senior Notes Due 2031 | 550 | 550 | 4.070% | January 15, July 15 | |||||||||||||||||||
| 5.100% Senior Notes Due 2035 | 500 | 500 | 5.127% | April 1, October 1 | |||||||||||||||||||
| 4.600% Senior Notes Due 2036 | 450 | 450 | 4.632% | January 15, July 15 | |||||||||||||||||||
| 5.850% Senior Notes Due 2041 | 600 | 600 | 5.879% | June 15, December 15 | |||||||||||||||||||
| 4.350% Senior Notes Due 2047 | 1,000 | 1,000 | 4.361% | April 1, October 1 | |||||||||||||||||||
| 2.750% Senior Notes Due 2050 | 750 | 750 | 2.773% | June 1, December 1 | |||||||||||||||||||
| 5,300 | 6,500 | ||||||||||||||||||||||
| Total unamortized discount | (11) | (12) | |||||||||||||||||||||
| Total unamortized debt issuance costs | (30) | (33) | |||||||||||||||||||||
| Fair value of interest rate swaps | (3) | — | |||||||||||||||||||||
| Total long-term debt | $ | 5,256 | $ | 6,455 | |||||||||||||||||||
Note 10 Restructuring Charges
Fiscal 2025 Restructuring Plan
In the fourth quarter of fiscal 2025, we approved a workforce reduction plan (Fiscal 2025 Restructuring Plan) to position us for continued growth as a more competitive and productive organization. The majority of the charges related to the Fiscal 2025 Restructuring Plan were recognized in the fourth quarter of fiscal 2025 and consist primarily of severance and other employment termination benefits to be paid in cash, and other non-cash related charges.
Restructuring charges related to the Fiscal 2025 Restructuring Plan were as follows:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| April 26, 2026 | April 27, 2025 | April 26, 2026 | April 27, 2025 | ||||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||
| Severance and other employee-related charges | $ | — | $ | — | $ | 12 | $ | — | |||||||||||||||||||||||||||
| Total | $ | — | $ | — | $ | 12 | $ | — |
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
Changes in restructuring reserves related to the Fiscal 2025 Restructuring Plan described above for the six months ended April 26, 2026 were as follows:
| Restructuring Charges Reserves | |||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
| Balance as of October 26, 2025 | $ | 165 | |||||||||||||||||||||
| Restructuring charges | 13 | ||||||||||||||||||||||
| Consumption of reserves | (139) | ||||||||||||||||||||||
| Balance as of January 25, 2026 | $ | 39 | |||||||||||||||||||||
| Consumption of reserves | (16) | ||||||||||||||||||||||
| Balance as of April 26, 2026 | $ | 23 | |||||||||||||||||||||
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
Note 11 Stockholders’ Equity, Comprehensive Income and Share-Based Compensation
Accumulated Other Comprehensive Income (Loss)
Changes in the components of accumulated other comprehensive income (loss) (AOCI), net of tax, were as follows:
| Unrealized Gain (Loss) on Investments, Net | Unrealized Gain (Loss) on Derivative Instruments Qualifying as Cash Flow Hedges | Defined and Postretirement Benefit Plans | Cumulative Translation Adjustments | Total | |||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Balance as of October 26, 2025 | $ | 11 | $ | (34) | $ | (100) | $ | 13 | $ | (110) | |||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | (10) | 25 | — | — | 15 | ||||||||||||||||||||||||
| Amounts reclassified out of AOCI | (9) | (20) | — | — | (29) | ||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | (19) | 5 | — | — | (14) | ||||||||||||||||||||||||
| Balance as of April 26, 2026 | $ | (8) | $ | (29) | $ | (100) | $ | 13 | $ | (124) |
| Unrealized Gain (Loss) on Investments, Net | Unrealized Gain (Loss) on Derivative Instruments Qualifying as Cash Flow Hedges | Defined and Postretirement Benefit Plans | Cumulative Translation Adjustments | Total | |||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| Balance as of October 27, 2024 | $ | (7) | $ | (87) | $ | (87) | $ | 13 | $ | (168) | |||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | 5 | 13 | — | — | 18 | ||||||||||||||||||||||||
| Amounts reclassified out of AOCI | — | 6 | — | — | 6 | ||||||||||||||||||||||||
| Other comprehensive income (loss), net of tax | 5 | 19 | — | — | 24 | ||||||||||||||||||||||||
| Balance as of April 27, 2025 | $ | (2) | $ | (68) | $ | (87) | $ | 13 | $ | (144) |
The tax effects on net income of amounts reclassified from AOCI for the three and six months ended April 26, 2026 and April 27, 2025 were not material.
Stock Repurchase Program
In March 2025, our Board of Directors approved a common stock repurchase program authorizing $10.0 billion in repurchases, which supplemented the previous $10.0 billion authorization approved in March 2023. As of April 26, 2026, approximately $13.2 billion remained available for future stock repurchases under the repurchase program.
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
The following table summarizes our stock repurchases, including and excluding excise tax, for the three and six months ended April 26, 2026 and April 27, 2025:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| April 26, 2026 | April 27, 2025 | April 26, 2026 | April 27, 2025 | ||||||||||||||||||||
| (in millions, except per share amount) | |||||||||||||||||||||||
| Shares of common stock repurchased | 1 | 11 | 2 | 19 | |||||||||||||||||||
| Cost of stock repurchased (including excise tax)* | $ | 400 | $ | 1,685 | $ | 737 | $ | 2,999 | |||||||||||||||
| Average price paid per share (including excise tax)* | $ | 352.63 | $ | 148.88 | $ | 302.69 | $ | 159.77 | |||||||||||||||
| Cost of stock repurchased (excluding excise tax) | $ | 400 | $ | 1,670 | $ | 737 | $ | 2,975 | |||||||||||||||
| Average price paid per share (excluding excise tax) | $ | 352.63 | $ | 147.59 | $ | 302.69 | $ | 158.47 |
(*) Stock repurchase amounts include the 1% surcharge on stock repurchases under the Inflation Reduction Act’s excise tax. This excise tax is recorded in equity and reduces the amount available under the repurchase program, as applicable.
We record common stock repurchased and held as treasury stock under the cost method using the first-in, first-out method. Upon reissuance of treasury stock, amounts in excess of the acquisition cost are credited to additional paid in capital. If we reissue treasury stock at an amount below our acquisition cost and additional paid in capital associated with prior treasury stock transactions is insufficient to cover the difference between the acquisition cost and the reissue price, this difference is recorded against retained earnings.
Dividends
In March 2026 and December 2025, our Board of Directors declared quarterly cash dividends in the amount of $0.53 and $0.46 per share, respectively. The dividend declared in March 2026 is payable in June 2026. Dividends paid during the six months ended April 26, 2026 and April 27, 2025 totaled $730 million and $651 million, respectively. We currently anticipate that cash dividends will continue to be paid on a quarterly basis, although the declaration of any future cash dividend is at the discretion of the Board of Directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination by the Board of Directors that cash dividends are in the best interests of our stockholders.
Share-Based Compensation
We have a stockholder-approved equity plan, the Employee Stock Incentive Plan (ESIP), which permits grants to employees of share-based awards, including stock options, stock appreciation rights, restricted stock, restricted stock units, performance share units and performance units. In addition, the plan provides for the automatic grant of restricted stock units to non-employee directors and permits the grant of share-based awards to non-employee directors and consultants. Share-based awards made under the plan may be subject to accelerated vesting under certain circumstances, including in the event of a change in control. In addition, we have an Omnibus Employees’ Stock Purchase Plan (ESPP), which enables eligible employees to purchase our common stock.
During the three and six months ended April 26, 2026 and April 27, 2025, we recognized share-based compensation expense related to share-based awards and ESPP shares. The effect of share-based compensation on the results of operations was as follows:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| April 26, 2026 | April 27, 2025 | April 26, 2026 | April 27, 2025 | ||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
| Cost of products sold | $ | 45 | $ | 40 | $ | 88 | $ | 78 | |||||||||||||||
| Research, development and engineering | 70 | 64 | 143 | 131 | |||||||||||||||||||
| Marketing and selling | 20 | 22 | 41 | 42 | |||||||||||||||||||
| General and administrative | 34 | 33 | 104 | 103 | |||||||||||||||||||
| Total share-based compensation | $ | 169 | $ | 159 | $ | 376 | $ | 354 |
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
The cost associated with share-based awards is typically recognized over the awards’ service period for the entire award on a straight-line basis, adjusting for estimated forfeitures. However, in the case of share-based awards granted to certain members of senior management that allow for partial accelerated vesting in the event of a qualifying retirement based on age and years of service, the compensation expense is recognized once the individual meets the conditions for a qualifying retirement. We calculate the estimated forfeiture rate on an annual basis, based on historical forfeiture activities. The cost associated with share-based awards that include performance and/or market goals is recognized for each tranche over the service period. The cost of the portion of share-based awards subject to performance goals is recognized based on an assessment of the likelihood that the applicable performance goals will be achieved, and the cost of the portion of share-based awards subject to market goals is recognized based on the assumption of 100% achievement of the goal.
As of April 26, 2026, we had $1.3 billion in total unrecognized compensation expense, net of estimated forfeitures, related to grants of share-based awards under the ESIP and shares issued under the ESPP, which will be recognized over a weighted average period of 2.8 years. As of April 26, 2026, there were 15 million shares available for grant of share-based awards under the ESIP, and an additional 7 million shares available for issuance under the ESPP.
Restricted Stock Units, Restricted Stock, Performance Share Units and Performance Units
A summary of the changes in restricted stock units, restricted stock, performance share units and performance units outstanding under our equity compensation plans during the six months ended April 26, 2026 is presented below:
| Shares | Weighted Average Grant Date Fair Value | ||||||||||||||||||||||
| (In millions, except per share amounts) | |||||||||||||||||||||||
| Outstanding as of October 26, 2025 | 9 | $ | 148.43 | ||||||||||||||||||||
| Granted | 3 | $ | 268.45 | ||||||||||||||||||||
| Vested | (3) | $ | 144.90 | ||||||||||||||||||||
| Canceled | (1) | $ | 154.52 | ||||||||||||||||||||
| Outstanding as of April 26, 2026 | 8 | $ | 191.03 |
As of April 26, 2026, 0.6 million additional performance-based awards could be earned based upon achievement of certain levels of specified performance and/or market goals.
A summary of the weighted-average grant date fair value per share of the granted restricted stock units, restricted stock, performance share units and performance units and total fair value vested awards for indicated periods is presented below:
| Six Months Ended | |||||||||||
| April 26, 2026 | April 27, 2025 | ||||||||||
| (In millions, except per share amounts) | |||||||||||
| Weighted average grant date fair value per share of awards granted | $ | 268.45 | $ | 166.52 | |||||||
| Total fair value of vested awards | $ | 444 | $ | 441 |
During the first quarter of fiscal 2026, certain members of senior management were granted both awards subject solely to time-based vesting requirements and awards that are subject to the achievement of certain levels of specific performance and market goals, in addition to time-based vesting requirements (Performance-Based Awards). These Performance-Based Awards are subject to the achievement of targeted levels of non-GAAP economic profit and targeted levels of total shareholder return (TSR) relative to the TSR of the companies in the Standard & Poor’s 500 Index. Each of these two metrics will be weighted 50% and will be measured over a three-year period.
The number of Performance-Based Awards that may vest in full after three years ranges from 0% to 200% of the target amount. The awards become eligible to vest only if the goals are achieved and will vest only if the grantee remains employed by us through each applicable vesting date, subject to a qualifying retirement based on age and years of service. The awards provide for a partial vesting based on actual performance at the conclusion of the three-year performance period in the event of a qualifying retirement.
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
Omnibus Employees’ Stock Purchase Plan
Under the ESPP, substantially all employees may purchase our common stock through payroll deductions at a price equal to 85 percent of the lower of the fair market value of our common stock at the beginning or end of each 6-month purchase period, subject to certain limits. Our purchasing cycles begin in March and September of each fiscal year. We issued a total of 1 million shares in each of the three and six months ended April 26, 2026 and April 27, 2025. Compensation expense is calculated using the fair value of the employees’ purchase rights under the Black-Scholes model. Underlying assumptions used in the model are outlined in the following table:
| Three and Six Months Ended | |||||||||||
| April 26, 2026 | April 27, 2025 | ||||||||||
| Dividend yield | 0.57% | 1.21% | |||||||||
| Expected volatility | 49.7% | 42.3% | |||||||||
| Risk-free interest rate | 3.64% | 4.27% | |||||||||
| Expected life (in years) | 0.5 | 0.5 | |||||||||
| Weighted average estimated fair value | $109.16 | $41.47 |
Note 12 Income Taxes
Our provision for income taxes and effective tax rate are affected by the geographical composition of pre-tax income which includes jurisdictions with differing tax rates, conditional reduced tax rates and other income tax incentives. It is also affected by events that vary from period to period, such as changes in income tax laws and the resolution of prior years’ income tax filings.
Our effective tax rates for the second quarter of fiscal 2026 and 2025 were 13.0 percent and 8.0 percent, respectively. The effective tax rate for the second quarter of fiscal 2026 was higher compared to the same period in the prior fiscal year, primarily due to a reduction of unrecognized tax benefits related to foreign operations as a result of the lapse of statutes of limitations in fiscal 2025.
Our effective tax rates for the first six months of fiscal 2026 and 2025 were 13.0 percent and 25.2 percent, respectively. The effective tax rate for the first six months of fiscal 2026 was lower than the same period in the prior fiscal year, primarily due to a remeasurement of deferred tax assets resulting from new tax incentive agreements in Singapore, partially offset by a reduction of unrecognized tax benefits related to foreign operations as a result of the lapse of statutes of limitations in fiscal 2025.
Note 13 Guarantees, Commitments and Contingencies
Guarantees
In the ordinary course of business, we provide standby letters of credit or other guarantee instruments to third parties as required for certain transactions initiated by either us or our subsidiaries. As of April 26, 2026, the maximum potential amount of future payments that we could be required to make under these guarantee agreements was approximately $327 million. We have not recorded any liability in connection with these guarantee agreements beyond that required to appropriately account for the underlying transaction being guaranteed. We do not believe, based on historical experience and information currently available, that it is probable that any amounts will be required to be paid under these guarantee agreements.
We also have agreements with various banks to facilitate subsidiary banking operations worldwide, including overdraft arrangements, issuance of bank guarantees, and letters of credit. As of April 26, 2026, we have provided parent guarantees to banks for approximately $297 million to cover these arrangements.
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
Legal Matters
From time to time, we receive notification from third parties, including customers and suppliers, seeking indemnification, litigation support, payment of money or other actions by us in connection with claims made against them. In addition, from time to time, we receive notification from third parties claiming that we may be or are infringing or misusing their intellectual property or other rights. We also are subject to various legal proceedings, government investigations or inquiries, and claims, both asserted and unasserted, that arise in the ordinary course of business. These matters are subject to uncertainties, and we cannot predict the outcome of these matters, or governmental inquiries or proceedings that may occur. Although the outcome of the above-described matters, claims and proceedings cannot be predicted with certainty, we do not believe at this time that any of the above-described matters will have a material effect on our consolidated financial condition or results of operations.
As previously disclosed, on February 11, 2026, we entered into a settlement agreement with the U.S. Commerce Department Bureau of Industry and Security (BIS) to resolve its inquiry relating to certain China customer shipments and export controls compliance and agreed to pay BIS an amount of $253 million, which we paid in full during our second quarter of fiscal 2026. The settlement agreement with BIS requires us to conduct internal audits of our export controls compliance program and maintain export compliance training and reporting mechanisms. The settlement agreement also includes a denial order that is suspended and will be waived three years after the date of the order issued under the settlement agreement, provided that we have timely completed the audit requirements.
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
Note 14 Industry Segment Operations
Our two reportable segments are: Semiconductor Systems and Applied Global Services (AGS). Segment information is presented based upon our management organization structure as of April 26, 2026 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to our reportable segments.
The Semiconductor Systems segment includes semiconductor capital equipment to enable materials engineering steps including etch, rapid thermal processing, deposition, chemical mechanical planarization, metrology and inspection, wafer packaging, and ion implantation.
The AGS segment provides integrated solutions to optimize equipment and fab performance and productivity, including services, spares and factory automation software for semiconductor and other products.
Effective the first quarter of fiscal 2026, we have moved our 200 millimeter (200mm) equipment business from our AGS segment to our Semiconductor Systems segment. We made this change in order to increase our operational efficiency and consolidate the reporting of our 200mm equipment with the reporting of our other capital equipment used to fabricate semiconductor chips in our Semiconductor Systems segment. In addition, effective in the first quarter of fiscal 2026, we are fully allocating corporate support costs to our reportable segments. Prior-period segment balances have been recast to conform to the current-year presentation.
Our President and Chief Executive Officer is our chief operating decision-maker (CODM). We derive the segment results directly from our internal management reporting system. The accounting policies we use to derive reportable segment results are substantially the same as those used for external reporting purposes. Management measures the performance of each reportable segment based upon several metrics including orders, revenue and operating income. Our CODM regularly reviews segment operating income to evaluate the performance of, and to assign resources to, each of the reportable segments. Actual results are compared to budgeted amounts as part of the CODM’s assessment of each segment’s performance and to make decisions about allocating resources to each segment. Our CODM does not evaluate operating segments using total asset information.
The Other category includes revenues, costs of products and operating expenses from other operating segments that do not meet the requirements for a reportable segment. We do not allocate to our reportable segments charges associated with restructuring actions, such as employee severance costs and asset impairment charges, unless the restructuring actions pertain to a specific reportable segment. Segment operating income also excludes interest income/expense and other financial charges and income taxes. Our CODM does not consider the unallocated costs in measuring the performance of the reportable segments.
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
Information for each reportable segment for and as of the end of each reporting period was as follows:
| Semiconductor Systems | Applied Global Services | Other | Total | |||||||||||||||||||||||
| (In millions, except percentages) | ||||||||||||||||||||||||||
| Three Months Ended April 26, 2026 | ||||||||||||||||||||||||||
| Revenue | $ | 5,965 | $ | 1,665 | $ | 280 | $ | 7,910 | ||||||||||||||||||
| Cost of products sold | 2,701 | 1,088 | 174 | 3,963 | ||||||||||||||||||||||
| Gross profit | $ | 3,264 | $ | 577 | $ | 106 | $ | 3,947 | ||||||||||||||||||
| Gross margin | 54.7 | % | 34.7 | % | 49.9 | % | ||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Research, development and engineering | 865 | 20 | 142 | 1,027 | ||||||||||||||||||||||
| Selling, general and administrative | 307 | 70 | 20 | 397 | ||||||||||||||||||||||
| Operating income (loss) | $ | 2,092 | $ | 487 | $ | (56) | $ | 2,523 | ||||||||||||||||||
| Operating margin | 35.1 | % | 29.2 | % | 31.9 | % | ||||||||||||||||||||
| Depreciation and amortization | $ | 101 | $ | 16 | $ | 18 | $ | 135 | ||||||||||||||||||
| Capital expenditures | $ | 120 | $ | 14 | $ | 501 | $ | 635 | ||||||||||||||||||
| Balance as of April 26, 2026 | ||||||||||||||||||||||||||
| Accounts receivable | $ | 4,820 | $ | 1,265 | $ | 287 | $ | 6,372 | ||||||||||||||||||
| Inventories | $ | 4,309 | $ | 1,852 | $ | 182 | $ | 6,343 | ||||||||||||||||||
| Goodwill | $ | 2,661 | $ | 964 | $ | 199 | $ | 3,824 | ||||||||||||||||||
| Semiconductor Systems | Applied Global Services | Other | Total | ||||||||||||||||||||||||||||||||||||||
| (In millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||
| Six Months Ended April 26, 2026 | |||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 11,106 | $ | 3,224 | $ | 592 | $ | 14,922 | |||||||||||||||||||||||||||||||||
| Cost of products sold | 5,048 | 2,110 | 382 | 7,540 | |||||||||||||||||||||||||||||||||||||
| Gross profit | $ | 6,058 | $ | 1,114 | $ | 210 | $ | 7,382 | |||||||||||||||||||||||||||||||||
| Gross margin | 54.5 | % | 34.5 | % | 49.5 | % | |||||||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||||||||
| Research, development and engineering | 1,663 | 38 | 254 | 1,955 | |||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 623 | 151 | 34 | 808 | |||||||||||||||||||||||||||||||||||||
| Legal settlement | 253 | — | — | 253 | |||||||||||||||||||||||||||||||||||||
| Restructuring charges | — | — | 12 | 12 | |||||||||||||||||||||||||||||||||||||
| Operating income (loss) | $ | 3,519 | $ | 925 | $ | (90) | $ | 4,354 | |||||||||||||||||||||||||||||||||
| Operating margin | 31.7 | % | 28.7 | % | 29.2 | % | |||||||||||||||||||||||||||||||||||
| Depreciation and amortization | $ | 182 | $ | 30 | $ | 50 | $ | 262 | |||||||||||||||||||||||||||||||||
| Capital expenditures | $ | 196 | $ | 24 | $ | 1,061 | $ | 1,281 | |||||||||||||||||||||||||||||||||
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
| Semiconductor Systems | Applied Global Services | Other | Total | |||||||||||||||||||||||
| (In millions, except percentages) | ||||||||||||||||||||||||||
| Three Months Ended April 27, 2025 | ||||||||||||||||||||||||||
| Revenue | $ | 5,401 | $ | 1,420 | $ | 279 | $ | 7,100 | ||||||||||||||||||
| Cost of products sold | 2,512 | 944 | 159 | 3,615 | ||||||||||||||||||||||
| Gross profit | $ | 2,889 | $ | 476 | $ | 120 | $ | 3,485 | ||||||||||||||||||
| Gross margin | 53.5 | % | 33.5 | % | 49.1 | % | ||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Research, development and engineering | 774 | 18 | 101 | 893 | ||||||||||||||||||||||
| Selling, general and administrative | 345 | 80 | (2) | 423 | ||||||||||||||||||||||
| Operating income (loss) | $ | 1,770 | $ | 378 | $ | 21 | $ | 2,169 | ||||||||||||||||||
| Operating margin | 32.8 | % | 26.6 | % | 30.5 | % | ||||||||||||||||||||
| Depreciation and amortization | $ | 73 | $ | 12 | $ | 18 | $ | 103 | ||||||||||||||||||
| Capital expenditures | $ | 118 | $ | 19 | $ | 373 | $ | 510 | ||||||||||||||||||
| Balance as of April 27, 2025 | ||||||||||||||||||||||||||
| Accounts receivable | $ | 4,925 | $ | 1,159 | $ | 103 | $ | 6,187 | ||||||||||||||||||
| Inventories | $ | 3,666 | $ | 1,804 | $ | 186 | $ | 5,656 | ||||||||||||||||||
| Goodwill | $ | 2,544 | $ | 964 | $ | 240 | $ | 3,748 | ||||||||||||||||||
| Semiconductor Systems | Applied Global Services | Other | Total | |||||||||||||||||||||||
| (In millions, except percentages) | ||||||||||||||||||||||||||
| Six Months Ended April 27, 2025 | ||||||||||||||||||||||||||
| Revenue | $ | 10,998 | $ | 2,773 | $ | 495 | $ | 14,266 | ||||||||||||||||||
| Cost of products sold | 5,123 | 1,860 | 302 | 7,285 | ||||||||||||||||||||||
| Gross profit | $ | 5,875 | $ | 913 | $ | 193 | $ | 6,981 | ||||||||||||||||||
| Gross margin | 53.4 | % | 32.9 | % | 48.9 | % | ||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
| Research, development and engineering | 1,508 | 32 | 212 | 1,752 | ||||||||||||||||||||||
| Selling, general and administrative | 725 | 167 | (7) | 885 | ||||||||||||||||||||||
| Operating income (loss) | $ | 3,642 | $ | 714 | $ | (12) | $ | 4,344 | ||||||||||||||||||
| Operating margin | 33.1 | % | 25.7 | % | 30.5 | % | ||||||||||||||||||||
| Depreciation and amortization | $ | 142 | $ | 24 | $ | 42 | $ | 208 | ||||||||||||||||||
| Capital expenditures | $ | 225 | $ | 23 | $ | 643 | $ | 891 | ||||||||||||||||||
Semiconductor Systems revenue is recognized at a point in time. AGS revenue is recognized at a point in time for tangible goods such as spare parts and equipment, and over time for service agreements. The majority of revenue recognized over time is recognized within 12 months of the contract inception.
Two customers accounted for approximately 21% and 15%, respectively, of our revenue for the six months ended April 26, 2026. No other customer accounted for greater than 10% of our revenue for the six months ended April 26, 2026.
APPLIED MATERIALS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued)
Revenue for Semiconductor Systems by market for the periods presented were as follows:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| April 26, 2026 | April 27, 2025 | April 26, 2026 | April 27, 2025 | ||||||||||||||||||||
| Foundry, logic and other | 67 | % | 66 | % | 65 | % | 68 | % | |||||||||||||||
| Dynamic random-access memory (DRAM) | 29 | % | 27 | % | 31 | % | 27 | % | |||||||||||||||
| Flash memory (NAND) | 4 | % | 7 | % | 4 | % | 5 | % | |||||||||||||||
| 100 | % | 100 | % | 100 | % | 100 | % |
Revenue by geographic region, determined by the location of customers’ facilities to which products were shipped and services were performed, was as follows:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| April 26, 2026 | April 27, 2025 | Change | April 26, 2026 | April 27, 2025 | Change | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (In millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| China | $ | 2,087 | 27 | % | $ | 1,774 | 25 | % | 18 | % | $ | 4,182 | 28 | % | $ | 4,017 | 28 | % | 4 | % | |||||||||||||||||||||||||||||||||||||||
| Korea | 1,572 | 20 | % | 1,562 | 22 | % | 1 | % | 3,030 | 20 | % | 3,229 | 23 | % | (6) | % | |||||||||||||||||||||||||||||||||||||||||||
| Taiwan | 2,155 | 27 | % | 1,997 | 28 | % | 8 | % | 3,877 | 26 | % | 3,180 | 22 | % | 22 | % | |||||||||||||||||||||||||||||||||||||||||||
| Japan | 623 | 8 | % | 572 | 8 | % | 9 | % | 1,148 | 8 | % | 1,112 | 8 | % | 3 | % | |||||||||||||||||||||||||||||||||||||||||||
| Southeast Asia | 185 | 2 | % | 135 | 2 | % | 37 | % | 520 | 3 | % | 421 | 3 | % | 24 | % | |||||||||||||||||||||||||||||||||||||||||||
| Asia Pacific | 6,622 | 84 | % | 6,040 | 85 | % | 10 | % | 12,757 | 85 | % | 11,959 | 84 | % | 7 | % | |||||||||||||||||||||||||||||||||||||||||||
| United States | 941 | 12 | % | 808 | 11 | % | 16 | % | 1,597 | 11 | % | 1,725 | 12 | % | (7) | % | |||||||||||||||||||||||||||||||||||||||||||
| Europe | 347 | 4 | % | 252 | 4 | % | 38 | % | 568 | 4 | % | 582 | 4 | % | (2) | % | |||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 7,910 | 100 | % | $ | 7,100 | 100 | % | 11 | % | $ | 14,922 | 100 | % | $ | 14,266 | 100 | % | 5 | % |
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