Applied Materials, Inc. is the leader in the materials engineering solutions used to produce virtually every semiconductor in the world. Semiconductors provide the foundation for advances in technology that are reshaping the global economy, including artificial intelligence, the internet of things, robotics, electric and autonomous vehicles, and clean energy. The company operates in two reportable segments: Semiconductor Systems and Applied Global Services (AGS). The Semiconductor Systems segment represents the largest contributor to net revenue. The industries in which the company operates, including the global semiconductor industry, have historically been cyclical and are subject to volatility in customer demand. Demand for the company's products and services is impacted by technology inflections and advances in fabrication processes, new and emerging technologies and market drivers, production capacity relative to demand for semiconductor chips and electronic devices, end-user demand, the timing of customers' investment in new or expanded fabrication plants, customers' capacity utilization, production volumes, access to affordable capital, business and consumer buying patterns and general economic and political conditions. Artificial intelligence (AI) and technologies related to AI are a significant demand driver for the industries served.

The industries in which Applied Materials operates are highly competitive and characterized by rapid technological change. Competitors range from small companies that compete in a single region, which may benefit from policies and regulations that favor domestic companies, to global, diversified companies. The company could see increased competition from domestic equipment manufacturers in China resulting from local government incentives and funding as well as export controls established by the United States government. The company believes that many of its products have strong competitive positions. The comprehensive portfolio offers a variety of differentiated products, including co-optimized and integrated materials solutions that enable unique films, structures and devices. The company has more than 23,500 active patents in the United States and other countries.

The company generates revenue by providing equipment, services and software to the semiconductor and related industries. Revenue is recognized when promised goods or services are transferred to a customer in an amount that reflects the consideration to which the company expects to be entitled. The company's customers include manufacturers of semiconductor wafers and chips and other electronic devices. The AGS segment provides services, spares and factory automation software to customer fabrication plants globally. The strategy is to continue to shift the AGS service and spares business to a subscription agreement model, improving customer factory performance and optimizing operating costs, and providing a more predictable revenue stream. The company's products are sold primarily through a direct sales force.

The Semiconductor Systems segment designs, develops, manufactures and sells a wide range of equipment used to fabricate semiconductor chips, also referred to as integrated circuits (ICs). This segment consists of the semiconductor capital equipment industry's most comprehensive portfolio of products used in the chip making process. Products address steps across materials engineering, process control and advanced packaging, including the conversion of patterns into device structures, transistor and interconnect fabrication, metrology, inspection and review, and packaging technologies for connecting finished IC die. The company has the ability to combine, co-optimize and integrate its technologies to develop highly differentiated solutions for customers. Semiconductor Systems sales are to customers that serve the following markets: foundry, logic and other; dynamic random access memory (DRAM); and flash memory (NAND). In fiscal 2025, Semiconductor Systems net revenue was $20.798 billion ¹, representing 73% ² of total net revenue. Foundry, logic and other accounted for 67% ³ of Semiconductor Systems net revenue, DRAM accounted for 26% ⁴, and flash memory (NAND) accounted for 7% ⁵.

The Applied Global Services (AGS) segment provides services, spares and factory automation software to customer fabrication plants globally. Through October 26, 2025, the AGS segment also manufactured and sold 200 millimeter (200mm) and other equipment to customers globally that serve non-leading-edge markets. Effective the first quarter of fiscal 2026, the 200mm equipment business will be moved to the Semiconductor Systems segment. AGS's transactional and subscription service products, spares and factory automation software is purchased by customers to optimize the performance of the company's large, global installed base of semiconductor and other equipment. In fiscal 2025, AGS net revenue was $6.385 billion ⁶, representing 23% ⁷ of total net revenue. The Corporate and Other category includes revenues and costs of products not included in the reportable segments, such as the display business, and had net revenue of $1.185 billion ⁸ in fiscal 2025.

In the fourth quarter of fiscal 2025, the company approved a workforce reduction plan (Fiscal 2025 Restructuring Plan) to position for continued growth as a more competitive and productive organization and expects approximately 4% ⁹ of its global workforce to be impacted under this plan. In the fourth quarter of fiscal 2025, the company recognized $181 million ¹⁰ of restructuring charges consisting primarily of severance and other employment termination benefits to be paid in cash, and other non-cash related charges. In March 2025, the Board of Directors approved a common stock repurchase program authorizing $10.0 billion ¹¹ in repurchases, which supplemented the previous $10.0 billion ¹² authorization approved in March 2023. At October 26, 2025, approximately $14.0 billion ¹³ remained available for future stock repurchases under the repurchase program. In September 2025, the company issued $550 million ¹⁴ in aggregate principal amount of 4.000% senior unsecured notes due 2031 and $450 million ¹⁵ in aggregate principal amount of 4.600% senior unsecured notes due 2036. In October 2025, the company used a portion of the net proceeds to repay the outstanding $700 million ¹⁶ in aggregate principal amount of its 3.900% senior unsecured notes due October 1, 2025. During fiscal 2025, the company paid four quarterly cash dividends, totaling $1.4 billion ¹⁷.

Net revenue for fiscal 2025 was $28.368 billion ¹⁸, compared to $27.176 billion ¹⁹ in fiscal 2024, an increase of $1.192 billion ²⁰. Gross margin was 48.7% ²¹ in fiscal 2025, compared to 47.5% ²² in fiscal 2024, an increase of 1.2 points ²³. Operating income was $8.289 billion ²⁴ in fiscal 2025, compared to $7.867 billion ²⁵ in fiscal 2024. Net income was $6.998 billion ²⁶ in fiscal 2025, compared to $7.177 billion ²⁷ in fiscal 2024. Earnings per diluted share was $8.66 ²⁸ in fiscal 2025, compared to $8.61 ²⁹ in fiscal 2024. Cash provided by operating activities was $7.958 billion ³⁰ in fiscal 2025.

The filing does not contain specific management guidance for the upcoming period in the form of a revenue, margin, or EPS range. The company states that investments by semiconductor equipment customers are expected to remain strong with growth in the adoption of high-bandwidth memory and other forms of advanced packaging, continued demand for AI and data center computing, and for non-leading edge nodes. Demand for AGS services is expected to grow as the installed base of systems and chambers increases and customers renew long-term service agreements.

The company believes secular drivers such as data center AI, edge AI and the internet of things, robotics and electric and autonomous vehicles will continue to create the next wave of growth for semiconductors and expand its served market opportunities. The company also believes device refresh cycles, such as those for PCs and smartphones, will contribute to the next wave of growth. The company's long-term growth strategy requires continued development of new materials engineering capabilities, including products and platforms that enable expansion into new and adjacent markets. The company has and continues to invest in RD&E in order to continue to offer new products and technologies.

The company's strategy is to continue to shift the AGS service and spares business to a subscription agreement model, improving customer factory performance and optimizing operating costs, and providing a more predictable revenue stream. The company is well positioned to address the increasing complexity in manufacturing semiconductors, by leveraging the semiconductor capital equipment industry's most comprehensive portfolio of products to connect and co-optimize its technologies. This enables customers to evolve their semiconductor technology roadmaps and achieve superior results in their products.

Gross margin increased in fiscal 2025 primarily driven by higher net revenue, favorable changes in customer and product mix, an increase in average selling prices, and lower material and manufacturing costs. The company expects to complete the Fiscal 2025 Restructuring Plan in fiscal 2026. The restructuring charges recognized in the fourth quarter of fiscal 2025 were $181 million ³¹.

The company utilizes a distributed manufacturing model under which manufacturing and supply chain activities are conducted in various countries, including United States, Singapore, Japan, China, Korea, Taiwan, Israel and other countries in Asia and Europe. The company uses qualified vendors, including contract manufacturers, to supply parts, services and product support. The company seeks to reduce costs and to lower the risks of manufacturing and service interruptions by selecting and qualifying alternate suppliers for parts; monitoring the financial condition of key suppliers; maintaining appropriate inventories of parts; qualifying new parts on a timely basis; and ensuring quality and performance of parts.

Research, development and engineering (RD&E) expenses were $3.570 billion ³² in fiscal 2025, compared to $3.233 billion ³³ in fiscal 2024. Capital expenditures were $2.260 billion ³⁴ in fiscal 2025, compared to $1.190 billion ³⁵ in fiscal 2024. In March 2025, the Board of Directors approved a common stock repurchase program authorizing $10.0 billion ³⁶ in repurchases. At October 26, 2025, approximately $14.0 billion ³⁷ remained available for future stock repurchases under the repurchase program. During fiscal 2025, the company paid four quarterly cash dividends, totaling $1.4 billion ³⁸. The company currently anticipates 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.

The United States government has implemented export regulations for U.S. semiconductor technology sold or provided to customers in China, which have limited the company's ability to provide certain products and services to customers in China. The U.S. government continues to issue new export licensing requirements, and additional updates and other requirements that have had the effect of further limiting the company's ability to provide certain products and services to customers outside the U.S., including in China. The United States has announced changes to its trade policy, including increased tariffs on imports, which have caused substantial uncertainty and have resulted in retaliatory measures, including new tariffs on U.S. goods imposed by China and other countries.

The industries in which the company operates have historically been cyclical and are subject to volatility in customer demand. Changes in demand can affect the timing and amounts of customer investments in technology and manufacturing equipment and can significantly impact operating results. The amount and mix of customers' capital equipment spending between different products and technologies can also significantly impact operating results. The company may incur unexpected or additional costs to align its business operations with changes in demand.

Management's message emphasizes that the company is the leader in materials engineering solutions used to produce virtually every semiconductor in the world. The company is well positioned to address the increasing complexity in manufacturing semiconductors by leveraging the semiconductor capital equipment industry's most comprehensive portfolio of products to connect and co-optimize technologies. Management's strategic priorities include developing products that help solve customers' challenges at technology inflections, growing the service business, and expanding served market opportunities in the semiconductor industry. The long-term growth strategy requires continued development of new materials engineering capabilities, including products and platforms that enable expansion into new and adjacent markets. The company's significant investments in RD&E are intended to enable delivery of new products and technologies before the emergence of strong demand, allowing customers to incorporate these products into their manufacturing plans during early-stage technology selection. Management believes secular drivers such as data center AI, edge AI and the internet of things, robotics and electric and autonomous vehicles will continue to create the next wave of growth for semiconductors and expand served market opportunities.

For fiscal 2025, total net revenue was $28.368 billion ⁴¹, compared to $27.176 billion ⁴² in fiscal 2024. Net income was $6.998 billion ⁴³ in fiscal 2025, compared to $7.177 billion ⁴⁴ in fiscal 2024. Diluted earnings per share was $8.66 ⁴⁵ in fiscal 2025, compared to $8.61 ⁴⁶ in fiscal 2024. Gross margin was 48.7% ⁴⁷ in fiscal 2025, compared to 47.5% ⁴⁸ in fiscal 2024. Operating income was $8.289 billion ⁴⁹ in fiscal 2025, compared to $7.867 billion ⁵⁰ in fiscal 2024. Operating margin was 29.2% ⁵¹ in fiscal 2025, compared to 28.9% ⁵² in fiscal 2024. Cash provided by operating activities was $7.958 billion ⁵³ in fiscal 2025, compared to $8.677 billion ⁵⁴ in fiscal 2024. Total cash, cash equivalents and investments were $12.900 billion ⁵⁵ as of October 26, 2025, compared to $12.258 billion ⁵⁶ as of October 27, 2024. The provision for income taxes was $2.273 billion ⁵⁷ in fiscal 2025, compared to $975 million ⁵⁸ in fiscal 2024, with the effective tax rate increasing to 24.5% ⁵⁹ from 12.0% ⁶⁰ primarily due to a $659 million ⁶¹ remeasurement of deferred tax assets resulting from new tax incentive agreements in Singapore and the recognition of a $407 million ⁶² valuation allowance against deferred tax assets related to corporate alternative minimum tax (CAMT) credits. Semiconductor Systems segment operating income was $7.379 billion ⁶³ in fiscal 2025, compared to $6.981 billion ⁶⁴ in fiscal 2024, with operating margin of 35.5% ⁶⁵ compared to 35.1% ⁶⁶. Applied Global Services segment operating income was $1.792 billion ⁶⁷ in fiscal 2025, compared to $1.812 billion ⁶⁸ in fiscal 2024, with operating margin of 28.1% ⁶⁹ compared to 29.1% ⁷⁰.

The industries served are volatile and difficult to predict, with demand impacted by technology inflections, production capacity, and end-user demand, making accurate forecasting challenging and potentially leading to unexpected costs or inventory write-offs. Global trade issues and changes in export regulations, particularly those restricting sales of U.S. semiconductor technology to customers in China, have limited the market for certain products and services, adversely impacting revenues and increasing exposure to foreign and Chinese domestic competition. The company is exposed to risks associated with a highly concentrated customer base, where a relatively limited number of customers account for a substantial portion of business; in fiscal 2025, two customers accounted for approximately 19% ³⁹ and 15% ⁴⁰, respectively, of net revenue. Supply chain disruptions, manufacturing interruptions, or failure to accurately forecast customer demand could affect the ability to meet customer demand, lead to higher costs, or result in excess or obsolete inventory. The company is exposed to risks related to protection and enforcement of intellectual property rights, as infringement or misappropriation could result in uncompensated lost market and revenue opportunities.