Applied Materials (AMAT) will report its fiscal first quarter 2026 earnings on Thursday, February 12th. AMAT shares have rallied significantly, rising around 30% year-to-date (YTD) and over 81% over 12 months. AMAT’s stock rally is supported by demand driven by artificial intelligence (AI).

The broader semiconductor equipment market is currently enjoying a strong upcycle, driven in large part by massive investments in AI data centers. As hyperscalers and chipmakers race to build capacity for more powerful and energy-intensive workloads, demand for advanced manufacturing tools has increased. Applied Materials, as one of the world’s leading suppliers of wafer manufacturing equipment, is benefiting from this trend.

Its tools are essential for producing cutting-edge chips used in AI accelerators and data center servers. In addition, Applied Materials equipment is used to produce chips for automotive, consumer electronics and a wide range of industrial applications.

Heading into the earnings report, sustained customer demand and favorable industry conditions could continue to support its top line. However, pressure on margins could dampen enthusiasm for stocks in the near term.

Valuations and technical signals also suggest caution. Applied Materials’ 14-period RSI is currently near 80.9, well above the 70 threshold typically associated with overbought conditions. This indicates that much of the optimism may already be priced into the stock.

Adding to the uncertainty is the stock’s recent behavior after earnings. Shares of Applied Materials have declined after earnings in each of the past four quarters, including a 3.3% drop following the most recent fourth-quarter report.

Applied Materials’ Q1 financial results will continue to benefit from increased demand for AI compute capacity. Over the past year, the company has expanded its technology capabilities, refined its product line, and streamlined operations, positioning itself well to capture growing investment in advanced chips.

Management expects first-quarter revenue of about $6.85 billion, with the bulk, about $5.03 billion, coming from its semiconductor systems segment. Applied Global Services (AGS) revenue is expected to contribute about $1.52 billion. Strong AI-focused data center capital spending is supporting demand for advanced enterprise tools.