Applied Materials, Inc.

Welcome to the Applied Materials first quarter of fiscal 2026 earnings call. During the presentation, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question and answer session. I would now like to turn the call over to Mike Sullivan, Corporate Vice President of Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining today's call. With me are Gary Dickerson, our President and CEO, and Bryce Hill, our Chief Financial Officer. Before we begin, I'd like to remind you that today's call includes forward-looking statements which are subject to risks and uncertainties that could cause our actual results to differ. Information concerning these risks and uncertainties is discussed in our most recent Form 10-K and other filings with the SEC. Today's call also includes non-GAAP financial measures. Reconciliations to gap measures can be found in today's earnings press release and in our quarterly earnings materials, which are available on our website at ir.appliedmaterials.com. Before we begin, I have several calendar announcements. On Tuesday morning, February 24th, Applied will host new product briefings at the SPIE Lithography and Patterning Conference in San Jose, and you're welcome to join us in person. We are also very pleased to announce the first event in our 2026 Masterclass Series, We plan to cover transistors and wiring on Wednesday, April 8th at 9 o'clock in the morning Pacific time and we'll host a live webcast. Finally, we're excited to announce two special events during Semicon West. On Monday afternoon, October 12th, we plan to host an investor open house event at the new Epic Center in Silicon Valley, California. We hope you'll join us there. And on Tuesday morning, October 13th, we plan to host an investor breakfast in San Francisco. We hope to see you in person or on the webcast. And with that introduction, I'd now like to turn the call over to Gary Dickerson.

Thank you, Mike. In our first fiscal quarter of 2026, applied materials delivered revenue and earnings above the midpoint of our guided range. Our strong performance and outlook for 2026 and beyond are fueled by the acceleration of investments in AI computing. AI is at a tipping point where improvements in performance and cost translate to real-world applications that deliver meaningful productivity gains and return on investment for users. The race to build out AI infrastructure is driving unprecedented spending on semiconductors, semiconductor manufacturing capacity, and research and development. Today, the most critical and fastest growing markets are leading-edge logic, high bandwidth memory DRAM, and advanced packaging. These are areas where Applied has strong leadership positions as well as an innovative pipeline of solutions to enable next generation technologies. In my prepared remarks, I will provide my perspective on how our markets are evolving, explain the role we are playing to enable the AI roadmap, and describe how we're turning the opportunities ahead of us into sustainable, profitable growth for Applied. Semiconductors are the heart of the AI technology stack. With the accelerated growth of AI in markets, we believe that global semiconductor industry revenues can potentially reach $1 trillion in 2026, several years earlier than prior predictions. For Applied, we expect to grow our semiconductor equipment business more than 20% this calendar year. We see the demand profile weighted towards the second half of the calendar year, with availability of customer cleanroom space being a key factor pacing the rate of investment. Our largest customers are giving us increased longer-term visibility to ensure we have operational capacity and service support in place for their ramps. Based on this visibility, we expect strong growth momentum to be carried into 2027. Improvements in AI data center performance and cost directly impact AI adoption rates. By increasing the number of tokens generated per second and lowering the total cost of ownership, which is dominated by energy consumption, more AI applications become economically viable. This need for higher performance and more energy efficient AI computing is reshaping semiconductor industry investments and driving high growth rates for applied in leading-edge logic, HBM DRAM, and advanced packaging. In leading-edge logic, our customers are adding capacity at FinFET nodes while simultaneously ramping gate all-around nodes. Applied is the clear number one process equipment provider in leading-edge logic with strong leadership positions across materials deposition, modification, and treatment, as well as in conductor etch and e-beam technologies. Gate-all-around nodes grow our available market considerably while also providing a catalyst for multiple points of market share gain. In DRAM, customers are aggressively adding capacity at six F squared nodes while in parallel developing next generation DRAM device architectures. AI computing is driving significant demand for high bandwidth memory DRAM, which has larger die sizes and requires three to four times more wafer starts per delivered bit than standard DRAM. In addition, The number of dies in the HBM stacks is increasing from 12 today to 16 and then 20 or more in the future. This further grows demand for wafer starts and advanced packaging. Applied as the number one process equipment provider in memory today, thanks to our very strong position in DRAM, where we are the clear leader in materials deposition for both wiring and patterning, as well as conductor etch and E-beam technologies. In advanced packaging, the mix of customer investments is changing. We expect the fastest-growing market segments in 2026 to be HBM and 3D chiplet stacking. Applied has very strong market share in both of these areas thanks to our leadership in materials deposition and removal technologies which is enabling us to extend our overall leadership in advanced packaging. In NAND, we are forecasting modest growth in equipment demand in 2026, and we expect NAND to remain less than 10% of wafer fab equipment spending. In ICAPS, customers who serve the IoT, communications, automotive, power, and sensor markets, we expect wafer fab equipment to be approximately flat year on year, both globally and in China. At Applied Materials, our strategy is inflection-focused innovation. By focusing our R&D resources on the development of high-value solutions to enable major device architecture inflections, we are accelerating our customers' roadmaps and driving sustainable value capture and margin expansion for applied. Our innovators have generated an expansive pipeline of next generation products. Products we have released over the past several years are significantly contributing to our growth in 2026. One example of this is our unique cold field emission e-beam technology, where we expect revenues to double this calendar year to more than a billion dollars and support process diagnostics and control being one of our fastest growing businesses in 2026. In addition, our leadership in CFE eBeam Imaging accelerates learning rates for next generation chip architectures and adoption of applied process equipment portfolio. In 2026, we are planning to launch more than a dozen new products including three for advanced logic and DRAM, which we announced earlier this week. Our VIVA radical treatment system delivers Angstrom-level precision engineering of nanosheet surfaces, which enables higher-speed, next-generation, gate-all-around transistors. SIM3Z Magnum, which is the newest variant of our SIM3 etch platform, enables Angstrom-level precision for critical etch steps in gate all-around transistors, and advanced DRAM. This extends our conductor etch market leadership in advanced logic and DRAM. And our spectral ALD system enables selective deposition of monocrystalline moly, a new material that can reduce contact resistance in advanced logic devices by up to 15%. Applied is leading the transition from ALD tungsten to ALD moly in logic contact formation. As transistor counts and wiring layers increase, copper PVD steps will continue to grow significantly, remaining an order of magnitude larger than ALD moly. This week, we also announced our first EPIC co-development agreement with Samsung Electronics. Applied's global EPIC platform is designed to support high velocity co-innovation with our customers and R&D partners. For chip makers, EPIC will provide significantly earlier access to Applied's R&D portfolio, enabling faster cycles of learning and accelerated transfer of next generation technologies into high volume manufacturing. For applied, Epic will give us better multi-node visibility to guide our R&D investments while improving R&D productivity, value sharing, and our ability to be designed in with our products and advanced service technologies. As our customers ramp complex new devices in high-volume manufacturing, we see accelerating demand for our advanced services, supporting a double-digit growth rate for our service business. We have many valuable service innovations that accelerate the transition of new technologies from lab to fab and then accelerate ramps to enable increased yield and output in high-volume production. Several years ago, we launched Applied's proprietary AIX, or Actionable Insight Accelerator, software capabilities. Today, we have more than 30,000 chambers connected to AIX servers using AI-powered monitoring, diagnostics, and analytics. Across these connected tools, we are seeing 30% faster response times, enabling increased wafer output for customers and better service engineer productivity for applied. In addition, we now have automated all are major distribution centers with state-of-the-art AI-enabled robotic systems, significantly improving our parts delivery speed and accuracy, as well as inventory optimization. Before I hand over to Bryce, let me briefly summarize. Semiconductors are the heart of the AI technology stack, and as AI adoption accelerates, we see industry revenues potentially reaching $1 trillion in 2026. Our inflection-focused innovation strategy is generating an expansive pipeline of higher value products that are extending applied leadership in leading-edge logic, memory, and advanced packaging, and enabling us to grow our semiconductor business more than 20% in 2026. We are driving deeper co-innovation engagements with our customers to enable energy efficient AI architecture inflections and accelerate the transfer of new technologies into high volume manufacturing. Epic will come online later this year, bringing together key innovators from our customers and applied to significantly increase value creation velocity. Bryce, over to you.