What CEOs Are Saying: The Physical Limits of AI Growth
Earnings calls from Applied Materials, Arista Networks, and JFrog
This week, the market rewarded companies that are solving AI infrastructure bottlenecks.
Applied Materials jumped 12% after reporting that semiconductor equipment demand will grow over 20% in 2026, limited only by cleanroom capacity. Arista Networks rose sharply on news it had raised its AI networking revenue target to $3.25 billion from $2.75 billion. The third company in our roundup, software supply chain platform provider JFrog, saw a dip in stock price - but its overall outlook is bullish, beating Wall Street expectations on revenue.
Taken together, these three’s earnings calls show the industry grappling with the mechanics of building AI at scale. Let’s look at three big takeaways from each call.
Applied Materials | Q1 FY2026 Earnings Call
Results: Strong beat on both revenue and earnings
Applied Materials, the leading supplier of semiconductor manufacturing equipment, reported Q1 revenue of $7.01 billion and EPS of $2.38, both ahead of expectations. The company guided Q2 revenue to $7.65 billion and raised its calendar 2026 semiconductor equipment growth outlook to more than 20%. Stock climbed following the results as analysts raised price targets, with several firms moving to the $400+ range.
The takeaways:
1. New AI chips are driving huge equipment demand.
Applied Materials holds the number-one market position in the segments growing fastest for AI: leading-edge logic, high-bandwidth memory (HBM), and advanced packaging. CEO Gary Dickerson explained the growth drivers:
The need for higher performance and more energy-efficient chips is driving high growth rates for leading-edge logic, high-bandwidth memory and advanced packaging. These are areas where Applied is the process equipment leader.
The company’s electron beam (eBeam) revenue is doubling to over $1 billion in 2026 as chipmakers adopt more precise inspection tools for advanced nodes.
