Applied Materials Q3 2025: Revenue Grows 8% Amid Major Global Sales Shift

Applied Materials (AMAT), a cornerstone of the global semiconductor industry, provides the highly complex equipment that chipmakers use to build the world's most advanced electronics. To understand where this critical industry is headed, a close look at the company's performance is essential. Their latest quarterly report, a Form 10-Q filed with the SEC, offers a detailed look into their financial health and strategic direction for the quarter ending July 27, 2025.

For the third quarter, Applied Materials reported a solid 8% increase in net revenue, growing to $7.3 billion from $6.8 billion in the same period last year. More impressively, the company expanded its profitability. Gross margin—the percentage of revenue left after accounting for the cost of goods sold—climbed to 48.8% from 47.3% a year ago. This indicates stronger pricing power or better cost controls, a healthy sign for the business. Diluted earnings per share (EPS) also rose by 8% to $2.22.

To visualize how the company's revenue flows through its costs to generate profit, the following diagram breaks down the income statement for the quarter.

In the diagram above, you'll notice a $12 million in unallocated revenue, which captures certain corporate-level research and development or general administrative overhead that supports the entire company.

Where the Growth Is Coming From

Breaking down the numbers reveals that the company's core business, Semiconductor Systems, remains the primary engine of growth. This segment, which sells equipment for fabricating semiconductor chips, saw its revenue climb 10% year-over-year to $5.4 billion.

The other segments showed more modest results:

• Applied Global Services, which provides services, parts, and consulting, grew by a slight 1% to $1.6 billion.
• The Display segment, which supplies equipment for making LCD and OLED screens, saw revenue increase by 5% to $263 million. However, its operating income jumped dramatically by 288%, from $16 million to $62 million, indicating a significant improvement in this smaller division's profitability.

A Shifting Global Map

Perhaps the most telling story in the report is the shifting geographic sources of revenue. While sales are up globally, the regional breakdown shows a dramatic realignment of where chip manufacturing investments are being made:

• Taiwan: Revenue from Taiwan surged an incredible 61% year-over-year, reaching $1.8 billion and now accounting for 25% of the company's total sales.
• China: While remaining the largest single market at $2.5 billion for the quarter (35% of total sales), its year-to-date revenue is down 18% compared to the prior year, suggesting a recent rebound after a period of slower activity.
• United States & Europe: In stark contrast, sales in the U.S. and Europe saw steep declines. U.S. revenue fell 35% to $683 million, and European revenue dropped 53% to $160 million.

This geographic divergence highlights the dynamic nature of the global semiconductor supply chain, with massive new fabrication plants, or "fabs," coming online in different regions at different times.

Looking Ahead

Applied Materials' Q3 performance reflects a robust semiconductor market, driven by the relentless demand for more powerful chips. The company continues to invest heavily in its future, with R&D expenses rising to $901 million for the quarter. It also returned over $1 billion to shareholders through stock repurchases, a signal of management's confidence.

The quarter was a success, but the significant shifts in its geographic sales underscore the complex global landscape. As nations around the world compete for semiconductor supremacy through subsidies and strategic initiatives, Applied Materials' results will continue to serve as a crucial indicator of which regions are leading the charge.