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Applied Materials and Lam Research have strong recent results and both point to AI-related investment as a growth driver. But those facts do not establish that either stock is overlooked or undervalued: that verdict requires a dated comparison of share prices, valuation, growth, and risk. The available company figures support a closer look at the businesses, not a buy conclusion.
What the companies reported
Applied Materials reported record revenue of $9.12 billion for Q3 FY2026, up 25% year over year. The quarter ended July 26, 2026. The company also raised its expectations for Semiconductor Systems revenue growth in calendar 2026; that is management’s outlook, not a reported result. Applied’s Q3 FY2026 release and SEC-filed materials contain the reported figures.
Lam Research reported $4.25 billion in systems revenue and $2.47 billion in customer support-related revenue for the quarter ended June 28, 2026. Separately, Lam’s FY2026 revenue grew 26.0% from FY2025. Its annual filing attributes the increase to equipment demand, particularly from foundry customers, and to customer-support revenue. These figures describe different periods and categories from Applied’s quarterly results; the growth rates are not a like-for-like comparison.
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Both companies sell into semiconductor manufacturing, but the revenue categories in their reports are not interchangeable. Applied’s Semiconductor Systems segment covers equipment sold across foundry, logic, other, and DRAM customers. Lam reports systems revenue from new equipment in deposition, etch, and other wafer-fabrication markets, separately from customer support-related revenue.
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| Company and period | Reported business measure | What it includes |
|---|---|---|
| Applied Materials, Q3 FY2026; quarter ended July 26, 2026 | $7.04 billion in Semiconductor Systems revenue | Segment mix was 67% foundry, logic and other, and 26% DRAM. Applied changed its segment presentation in FY2026 by moving its 200-millimeter equipment business into Semiconductor Systems; comparisons should use the company’s recast figures. |
| Lam Research, quarter ended June 28, 2026 | $4.25 billion in systems revenue | New leading-edge equipment in deposition, etch, and other wafer-fabrication markets. |
| Lam Research, quarter ended June 28, 2026 | $2.47 billion in customer support-related revenue | Services, spares, upgrades, and Reliant product-line equipment. The reported mix does not by itself establish how resilient this business would be in a downturn. |
The quarter-end dates differ, and the companies define their revenue categories differently. A sound comparison needs aligned periods and definitions, not just the headline dollar amounts.
Why AI is part of the growth case—and what remains uncertain
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.” This is the company’s forward-looking assessment. It is not proof that the forecast will be achieved or that future demand is assured.
Lam likewise says AI is driving higher semiconductor-industry spending across memory and non-memory segments in 2026. Its FY2026 Form 10-K identifies 3D device scaling, multiple patterning, process-flow changes, and advanced packaging integration as potential longer-term drivers for its deposition, etch, and clean businesses. These are company expectations, not guaranteed outcomes.
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Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallApplied’s Q4 FY2026 guidance was 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 actual results. The EPS figure is non-GAAP and uses the company’s stated adjustments and tax assumptions; it should not be treated as equivalent to an unadjusted earnings measure.
What could challenge the investment case
Export controls and geographic exposure
Lam warns in its FY2026 Form 10-K that export controls can limit sales or require licenses, add compliance costs, and affect whether it can obtain materials or components on acceptable terms. A change in licensing or supply conditions could affect operations and sales. Do not assume that sales to any geography will continue at the same level.
Customer spending and forecast risk
Both businesses depend on semiconductor manufacturers’ equipment spending. The reported results show strong demand in the periods described, but they do not establish a floor for future revenue or show how either company would perform through a downturn. AI-linked demand and the technology transitions identified by management should therefore be treated as potential drivers, not as protection against weaker spending.
Valuation still needs to be checked
Strong growth does not answer whether a stock is cheap. Without current, date-aligned multiples and a consistent earnings basis, there is no supported conclusion here that either company is undervalued. Share prices can already reflect expectations for AI-related growth, and a good business can still be an unattractive investment at an excessive valuation.
How to decide whether either stock is overlooked
Start with a dated market snapshot and use the same data date and accounting basis for both companies. Compare their current valuations with their own histories and relevant semiconductor-equipment peers rather than relying on a single price-to-earnings multiple.
Best Value
- Check earnings multiples: compare trailing and forward price-to-earnings ratios, identifying the date and the estimate basis behind forward earnings.
- Check business value: compare enterprise value to sales and operating earnings, using consistent definitions and periods.
- Check cash generation: compare free-cash-flow yield and recent growth and margins; establish how each measure is calculated.
- Account for business mix: examine customer-support revenue alongside equipment exposure, while avoiding assumptions that support revenue is immune to a downturn.
- Assess risks and expectations: review geographic and China exposure, export-control disclosures, and how much expected AI or other technology-driven demand appears embedded in the share price.
Applied’s and Lam’s filings and earnings materials are the appropriate places to verify reported results, segment definitions, and stated risks. Until a current valuation comparison is made, “overlooked” remains a question rather than a demonstrated fact.
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