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Applied Materials and Lam Research have reported strong results amid rising demand for semiconductor-manufacturing equipment, with both companies pointing to artificial intelligence as a growth driver. But strong results do not prove that either stock is overlooked or undervalued: that requires a dated comparison of share prices, earnings, cash flow and peer valuations, and the figures available here do not establish one.
What the companies’ reported results show
The two companies sell equipment and related services to semiconductor manufacturers, but their reported figures cover different periods and revenue categories. Applied Materials reported its fiscal third quarter ended July 26, 2026; Lam Research reported its quarter ended June 28, 2026. Lam also reported full-year fiscal 2026 growth. Those figures are useful context, not a like-for-like growth comparison.
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| Company and period | Reported revenue or mix | What the figure represents |
|---|---|---|
| Applied Materials, Q3 FY2026, ended July 26, 2026 | $9.12 billion total revenue, up 25% year over year; $7.04 billion from Semiconductor Systems | The company reported record quarterly revenue. Semiconductor Systems included 67% foundry, logic and other, and 26% DRAM. |
| Lam Research, quarter ended June 28, 2026 | $4.25 billion in systems revenue and $2.47 billion in customer support-related revenue | Systems revenue covers new equipment in deposition, etch and other wafer-fabrication markets. Support-related revenue includes services, spares, upgrades and Reliant product-line equipment. |
| Lam Research, FY2026 versus FY2025 | Revenue grew 26.0% | Lam attributed the increase to equipment demand, particularly from foundry customers, and customer-support revenue. |
Applied changed its segment presentation in FY2026 by moving its 200-millimeter equipment business into Semiconductor Systems, so comparisons with earlier periods should use the company’s recast figures. The Applied quarterly growth rate and Lam’s annual growth rate cover different periods; neither establishes that one business grew faster on a comparable basis.
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How their businesses differ
Applied Materials
Applied’s Semiconductor Systems segment serves foundry, logic, other and DRAM customers. Its reported mix indicates that foundry, logic and other made up 67% of the segment and DRAM 26% in Q3 FY2026. These are shares of that segment, not of total company revenue.
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Lam Research
Lam reports equipment systems separately from customer support-related revenue. Its systems category includes tools used in deposition and etch, among other wafer-fabrication markets. The support category includes services, spares and upgrades, as well as Reliant equipment, so it is broader than service revenue alone. The reported figures establish support as a substantial part of Lam’s business, but do not show how it would hold up in a downturn.
Why AI could support further demand—and why that remains a forecast
Both companies connect semiconductor-manufacturing investment to AI demand. Applied CEO Gary Dickerson said on August 13, 2026: “As the rapid global adoption of AI drives unprecedented demand for our materials engineering solutions, we are further raising our Semiconductor Systems revenue expectations for calendar 2026 and are confident we will grow faster than the market this year.” That is management’s outlook, not a reported result or a guarantee.
Lam likewise says AI is driving higher semiconductor-industry spending across memory and non-memory in 2026. Its longer-term growth case also points to 3D device scaling, multiple patterning, process-flow changes and advanced packaging integration as potential drivers for its deposition, etch and clean businesses. Those are company assessments about future demand; their realization depends on customers’ investment decisions and market conditions.
Applied’s near-term guidance is not revenue already earned
For Q4 FY2026, Applied guided to total revenue of $10.25 billion, plus or minus $500 million, and non-GAAP diluted EPS of $4.02, plus or minus $0.20. These are forecasts, not reported results. The EPS figure is non-GAAP and reflects the company’s stated adjustments and tax assumptions; it should not be treated as interchangeable with GAAP earnings.
What could undermine the growth case
- Customer spending can change. Both businesses depend on semiconductor manufacturers buying equipment and related support. Strong demand in a reported period does not establish a floor for spending in a weaker one.
- Export rules can constrain sales or supply. Lam warns that export controls may limit sales or require licenses, add compliance burdens, and affect its ability to obtain needed materials or components on acceptable terms. Investors should not assume sales into any geography continue at the same level.
- AI expectations may not translate into results. The companies’ forecasts and assessments describe anticipated demand. Actual revenue depends on customer demand and the timing of investments.
- Reported categories are not identical. Applied’s shifted segment presentation and the companies’ different definitions and reporting periods make unadjusted comparisons potentially misleading.
How to decide whether either stock is actually overlooked
“Overlooked” is a valuation claim, not a synonym for a strong quarter or an attractive industry outlook. A defensible conclusion needs a dated share-price snapshot and comparable financial measures for both companies and relevant equipment peers. The figures summarized above do not establish that either stock is cheap, undervalued or overlooked.
Before drawing that conclusion, compare:
- Trailing and forward price-to-earnings ratios, using a consistent date and clearly identified earnings estimates.
- Enterprise value relative to sales or operating earnings, with accounting periods aligned.
- Free-cash-flow yield alongside recent growth and margins.
- Customer-support mix and business exposure to equipment spending.
- China and other geographic exposure, including the potential effect of export controls.
- Each company’s valuation history against relevant equipment peers.
Each multiple depends on its date and its earnings basis; a forward multiple also depends on the estimates used. Without that consistent, current comparison, calling Applied or Lam an overlooked stock would go beyond what their reported results establish.
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