Investing.com -- Applied Materials reported record third-quarter revenue on Thursday as surging demand for AI-related semiconductors drove strong growth across its chipmaking equipment business, while the company raised its expectations for semiconductor systems revenue for calendar 2026.

The chip equipment maker posted revenue of $9.12 billion for the quarter ended July 26, up 25% from a year earlier. GAAP net income rose 43% to $2.54 billion, while adjusted earnings per share increased 41% to a record $3.50. Gross margin expanded to 50.3% from 48.8% a year earlier.

Applied Materials said rapid adoption of artificial intelligence was driving unprecedented demand for its materials engineering products and said it expected to grow faster than the semiconductor equipment market in 2026. The company also said it expected another strong growth year in 2027, citing increased visibility into customer demand.

Semiconductor Systems revenue rose to $7.04 billion from $5.56 billion a year earlier, with DRAM accounting for 26% of sales compared with 22% a year ago. Revenue from Applied Global Services increased to $1.78 billion from $1.46 billion.

The company said growth in the second half of the calendar year should remain strong, particularly in DRAM, leading-edge foundry and logic, and advanced packaging. It is also investing in additional manufacturing capacity to support projected demand through the end of the decade.

For the fiscal fourth quarter, Applied Materials forecast revenue of about $10.25 billion, plus or minus $500 million, and adjusted diluted EPS of $4.02, plus or minus 20 cents.

The company generated $3.04 billion in operating cash flow during the quarter and returned $860 million to shareholders through $440 million of share repurchases and $420 million in dividends.

Applied Materials also expanded its EPIC Center research partnerships to 11 engagements, including new collaborations with Broadcom, the University of California, Berkeley and SCREEN Semiconductor Solutions, as it seeks to accelerate development of technologies for next-generation AI systems.