Applied Materials vs. TSMC: who is growing faster on AI demand

Short answer: TSMC is still growing faster and is more than five times bigger, but Applied Materials is now growing at its quickest pace in years. A Motley Fool chart comparison published today lines up eight quarters of revenue for both companies. TSMC's latest quarter hit $46.7 billion.

One note on the angle. There is no merger or contract between these two companies. This is a revenue comparison, so the useful question is who spends the money and who collects it.

The numbers side by side

The two companies have different reporting calendars, so the quarters do not match exactly. Applied's figures cover its fiscal third quarter, which ended July 26. TSMC's cover the quarter ended September 30.

Applied's growth figures come from its earnings release and an earnings call transcript. Its guidance is reported by BigGo Finance. TSMC's figures, including its fourth-quarter outlook, are in its filing with the US securities regulator.

Applied Materials: record quarter, big acceleration

Applied sells the deposition, etching and other tools that chipmakers use to build chips. Its CEO Gary Dickerson said the quarter included the highest sequential revenue growth in the company's history, in the earnings release.

The jump is sharp compared with earlier this year. Revenue was down 2% year over year in the fiscal first quarter, then up 11% in the second, before the 25% gain in the third.

DRAM is a big driver. On the earnings call, Applied said DRAM revenue, which includes HBM packaging, grew 52% year over year. The Motley Fool piece credits the surge partly to Applied nearly doubling its manufacturing footprint, including a new Singapore site opened during the quarter.

The market was not impressed. TIKR reported the stock fell more than 5% after the results, even though revenue beat the roughly $9.0 billion consensus.

Verdict: the fastest-improving growth story of the two, from a much lower base.

TSMC: bigger and still faster

TSMC makes the chips. It reported third-quarter net income of NT$763.06 billion, up 68.7% year over year, with a 66.4% gross margin. Its high-performance computing platform, the AI-heavy segment, rose 22% from the prior quarter and made up 68% of revenue.

Look at the full year too. The Motley Fool's earlier better-buy comparison put TSMC's 2025 revenue at about $121 billion, roughly 38% growth. It put Applied's 2025 revenue at nearly $28 billion, about 4.4% growth.

Verdict: the steadier compounder, and still the faster grower on every period above.

Who pays, who gains

This is the link between the two. TSMC is a customer type for Applied. The Motley Fool says Applied sells to chipmakers like TSMC.

TSMC raised its 2026 capital spending budget to $60 billion to $64 billion, up from $52 billion to $56 billion. It said 70% to 80% would go to advanced process technologies. In the third quarter alone, capital expenditure was NT$443.21 billion.

Spending like that flows to toolmakers. Applied also names memory makers as buyers. Bloomberg, via the Taipei Times, reported that customers such as Samsung and Micron are expanding production to ease memory shortages.

In short, cloud and AI demand pays TSMC and the memory makers. They pay Applied. Applied's growth depends on their budgets staying high.

Is the gap closing?

The sources disagree here. The Motley Fool's summary says Applied's revenue gap to TSMC continues to narrow. Its own key points say investors should watch whether the gap widens or narrows.

The article's own table points the other way. Using its figures, TSMC's lead was $19.6 billion in the quarter ended December 2024 ($26.8 billion against $7.2 billion). It was $31.1 billion in the most recent matched pair ($40.2 billion against $9.1 billion). Applied's revenue fell from about 27% of TSMC's to about 23%. Those are our calculations from the table, and the quarters are not perfectly aligned.

Applied is accelerating, but TSMC is accelerating too.

What to watch next

Both companies have given forecasts. Applied guides to $9.75 billion to $10.75 billion for its fiscal fourth quarter. TSMC expects $52.3 billion to $54.3 billion in the fourth quarter.

The test is whether TSMC's higher capital budget, and its statement that spending over the next three years will be even higher than the last three, shows up in Applied's orders. If you follow AI infrastructure, track both. TSMC shows demand for chips. Applied shows whether the factory build-out is keeping pace.

This article is news and analysis, not investment advice.