Applied MaterialsAMAT

01AGS segment provides services, spares and factory automation software to customer fabrication plants globally to help customers optimize performance of our large, global installed base of semiconductor and other products Demand for AGS' service and spares is driven by our large and growing installed base of manufacturing systems Our 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 us a more predictable revenue stream AGS' operating margin for the three and nine months ended July 26, 2026 increased compared to the same periods in the prior year primarily due to higher revenue from services and spares and favorable changes in customer and product mix

02Development efforts are focused on solving customers' key technical challenges in patterning, transistor, interconnect, process control, and packaging performance The increase in foundry and logic customers' spending for the three and nine months ended July 26, 2026 reflected stronger demand for leading-edge manufacturing technologies Memory customers' spending in the three and nine months ended July 26, 2026 was higher compared to the same periods in the prior year due to increased customer investments in DRAM technology transitions Gross margin in the three and nine months ended July 26, 2026 increased compared to the same periods in the prior year primarily driven by higher revenue, increases in average selling prices, and lower material and manufacturing costs

03Sustained RD&E reinvestment at scale creates cumulative know-how in new materials and process integration that is difficult for smaller or later entrants to replicate, locking in development-tool-of-record positions that translate to production-tool-of-record wins.

04U.S. CHIPS Act credits (now at 35%) and Singapore incentive agreements create a multi-year tax tailwind that enhances after-tax cash generation, funding buybacks and R&D without incremental leverage.