Applied Materials Inc (NASDAQ:AMAT) shares surged about 12% in premarket trading Friday following a strong quarterly performance. The Santa Clara-based chip equipment maker benefited significantly from an acceleration in industry-wide investments toward artificial intelligence computing.

The company reported first-quarter non-GAAP earnings per share of $2.38, comfortably beating the $2.21 analyst consensus. Revenue reached $7.01 billion for the period, exceeding the $6.87 billion anticipated by Wall Street despite a 2% year-over-year decline.

Record performance in specific segments bolstered the results, with Semiconductor Systems achieving an all-time high in DRAM revenue. Additionally, the Applied Global Services division delivered record revenue for services and spares as customers maintained high utilization of existing tools.

“Applied Materials delivered strong results in our fiscal first quarter, fueled by the acceleration of industry investments in AI computing,” said Gary Dickerson, President and CEO. He further noted that the company expects “to grow our semiconductor equipment business over 20 percent this calendar year.”

Management highlighted their ongoing commitment to expanding industrial capacity to meet the surging technical requirements of next-generation chips. CFO Brice Hill stated, “Over the past several years, we have nearly doubled our system manufacturing capability, strengthened our supply chain and increased our inventories in preparation for market growth.”

Looking ahead, Applied Materials issued bullish guidance for the second quarter of 2026, forecasting revenue between $7.15 billion and $8.15 billion. This outlook sits well above the $7 billion consensus, signaling continued momentum in the semiconductor capital equipment market.

The company also guided for 2026 systems revenue growth of more than 20%.

Commenting on the print, Bank of America analyst Vivek Arya said it is now “Applied’s turn to shine as AI accelerates semicap upcycle.” 

“As the largest semicap with the broadest portfolio, AMAT has strong leverage to this multi-year WFE cycle focused in leading-edge F/L and DRAM to support outsized AI demand,” he wrote.

The analyst raised the price target on the stock to $420 from $350.

Separately, Morgan Stanley analysts led by Shane Brett said the chipmaker’s “beat and raise, coupled with 20%+ systems guidance, represents a leap – not merely a step – toward shifting the narrative around the stock in a more constructive direction.”