Applied Materials (NASDAQ:AMAT) shares surged 11.7% in premarket trading Friday, leading a broad rally across the semiconductor sector after the company issued a second-quarter forecast that shattered Wall Street estimates.
The optimistic outlook signals that the artificial intelligence infrastructure build-out is entering a high-velocity phase, consuming global memory supplies and forcing chipmakers to invest heavily in new production capacity.
The largest U.S. semiconductor equipment manufacturer projected second-quarter revenue of approximately $7.65 billion (plus or minus $500 million), far exceeding the $7.01 billion average analyst estimate.
The company also forecast adjusted profit of $2.64 per share, well above the $2.28 expected by the market.
The surge in orders comes as hyperscale data centers and AI processor manufacturers scramble for high-bandwidth memory.
HBM, critical for training large language models, requires three to four times more wafer starts per bit than standard DRAM, creating a massive tailwind for Applied’s etching and deposition tools.
Industry group SEMI recently bolstered this bullish narrative, forecasting that sales of wafer-fab equipment will rise 9% to $126 billion in 2026 and hit $135 billion in 2027.
RBC analysts noted that Applied Materials’ "leadership position in DRAM, Advanced Logic, and Packaging" makes it the primary beneficiary of this GenAI-driven spending cycle.
For the first fiscal quarter ended January 25, 2026, Applied reported revenue of $7.01 billion, beating estimates of $6.88 billion despite a slight 2% year-over-year decline.
Adjusted EPS for the quarter was $2.38, comfortably ahead of the $2.21 consensus.
The company’s stock is now up approximately 28% year-to-date, doubling the 14% gain of the Philadelphia Semiconductor Index.