Applied Materials (AMAT) AI Stock Analysis

• Market Cap: $279.72B
• Dividend Yield: 0.69%
• Average Volume (3M): 7.67M
• Price to Earnings (P/E): 31.3
• Beta (1Y): 1.80
• Revenue Growth: 4.47%
• EPS Growth: 0.48%
• Country: US
• Employees: 36,000
• Sector: Technology
• Sector Strength: 88
• Industry: Semiconductors
• EPS (TTM): 2.38
• Shares Outstanding: 793,609,860
• 10 Day Avg. Volume: 6,436,690
• 30 Day Avg. Volume: 7,666,514
• PEG Ratio: 76.90
• Price to Book (P/B): 9.11
• Price to Sales (P/S): 6.56
• P/FCF Ratio: 32.64
• Enterprise Value/Market Cap: 1.00
• Enterprise Value/Revenue: 9.88
• Enterprise Value/Gross Profit: 20.27
• Enterprise Value/Ebitda: 28.18
• 1Y Price Target: $428.84
• Price Target Upside: 21.67% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 27
• EPS Forecast (FY): 11.03
• Revenue Forecast (FY): $31.35B

• Rating: 72 Outperform
• Price Target: $379.00 ▲(7.53% Upside)
• Action: Reiterated Date: 03/14/26
• Date: Action: Reiterated 03/14/26

The score is driven primarily by strong margins, cash generation, and a solid balance sheet, supported by a generally positive demand outlook from the latest earnings call. Offsetting factors include very weak TTM revenue growth, a mixed/soft near-term technical picture, and a relatively rich valuation with a low dividend yield; the export compliance settlement adds a modest additional risk.

Positive Factors

Strong margins & cash generation

Applied’s high gross and net margins, plus ~ $6.2B free cash flow and ~$8.7B operating cash flow, underpin durable internal funding for R&D, capacity and shareholder returns. Strong cash generation supports investment through the cycle and preserves strategic optionality.

R&D leadership & strategic partnerships

Large, sustained R&D spending and anchor partnerships (SK hynix, Micron) plus a $5B EPIC Center deepen co-innovation ties. This accelerates qualification, embeds Applied in customers’ roadmaps and strengthens a technology moat in AI-focused DRAM/HBM and advanced packaging.

Recurring services and software upside

A sizable installed base with rising services, analytics and automation attachment rates builds recurring, higher-margin revenue. This reduces cyclicality from new tool sales, increases customer retention and supports predictable aftermarket cash flows over multiple quarters.

Negative Factors

Very weak recent revenue trend

A ~-54% TTM top-line swing is a material structural risk: revenue contractions erode operating leverage, complicate capacity and R&D pacing, and elevate execution risk if customer capex timing or technology transitions remain uneven over several quarters.

Regulatory exposure & China demand mix

The $252.5M export compliance settlement and mixed China demand show ongoing regulatory and geopolitical sensitivity. Export controls and compliance constraints can structurally limit addressable markets and elongate customer qualification, pressuring shipments and growth.

Customer concentration & book-to-bill ~1.0

A book-to-bill near 1.0 and dependence on a few large customers mean order intake only matches revenue recognition. Long qualification cycles and timing shifts limit upside from backlog depletion and make near-term growth sensitive to a small set of customer capex decisions.

Applied Materials Business Overview & Revenue Model

Company Description

Applied Materials, Inc. provides manufacturing equipment, services, and software to the semiconductor, display, and related industries. It operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. The Semiconductor Systems segment develops, manufactures, and sells various manufacturing equipment that is used to fabricate semiconductor chips or integrated circuits. This segment also offers various technologies, including epitaxy, ion implantation, oxidation/nitridation, rapid thermal processing, physical vapor deposition, chemical vapor deposition, chemical mechanical planarization, electrochemical deposition, atomic layer deposition, etching, and selective deposition and removal, as well as metrology and inspection tools. The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity comprising spares, upgrades, services, remanufactured earlier generation equipment, and factory automation software for semiconductor, display, and other products. The Display and Adjacent Markets segment offers products for manufacturing liquid crystal displays; organic light-emitting diodes; and other display technologies for TVs, monitors, laptops, personal computers, electronic tablets, smart phones, and other consumer-oriented devices. The company operates in the United States, China, Korea, Taiwan, Japan, Southeast Asia, and Europe. Applied Materials, Inc. was incorporated in 1967 and is headquartered in Santa Clara, California.

How the Company Makes Money

Applied Materials primarily makes money by selling capital equipment and related offerings that semiconductor and display manufacturers use to build and operate fabrication lines. Its revenue model is mainly business-to-business and is tied to customers’ capital expenditure cycles and technology transitions. Key revenue streams include: 1) Semiconductor equipment sales: The largest portion of revenue typically comes from supplying wafer-fabrication tools and systems used across major process steps (e.g., deposition, etch, ion implantation, CMP, metrology/inspection, and advanced packaging/assembly-related solutions). Revenue is recognized from shipments/acceptance of these tools and from associated software or options bundled with the systems. 2) Applied Global Services (service and support): The company generates recurring revenue by supporting its installed base of tools through service contracts, spare parts, consumables, tool upgrades, process support, equipment refurbishments, and productivity/automation software. As customers run fabs continuously, parts replacement, maintenance, and performance upgrades create repeat purchase behavior that is less cyclical than new tool sales. 3) Display-related equipment: Applied Materials earns revenue from selling equipment used in the manufacture of advanced displays (e.g., certain LCD and OLED process steps) along with associated services and upgrades. This segment tends to be more project-based and sensitive to display industry capacity additions. Additional factors influencing earnings: - Technology transitions and node migration: As chipmakers move to smaller nodes, new transistor architectures, new memory structures, and advanced packaging, they often need new process capabilities and higher tool intensity, which can increase demand for Applied’s equipment and upgrades. - Installed base leverage: A large global installed base supports ongoing services, spares, and tool performance enhancement opportunities, contributing to recurring revenue. - Customer concentration and long sales cycles: Revenue depends on a relatively small number of large semiconductor and display manufacturers, and sales are influenced by long qualification cycles, tool acceptance criteria, and customers’ multi-quarter investment plans. Significant partnerships: null

Applied Materials Financial Statement Overview

Summary

Strong profitability and cash generation (TTM gross margin ~48.7%, net margin ~27.8%, FCF ~$6.2B with strong growth) and a solid, improving leverage profile (debt-to-equity ~0.30). The major offset is the sharply negative TTM revenue growth (-54.3%), which raises near-term cyclical/demand risk despite resilient margins.

Income Statement

Applied Materials shows strong profitability with a TTM (Trailing-Twelve-Months) gross margin of ~48.7% and net margin of ~27.8%, while operating profitability remains robust (EBIT margin ~33.5%). However, the TTM (Trailing-Twelve-Months) revenue growth rate is sharply negative (-54.3%), a notable red flag versus the steady low-to-mid single-digit growth seen in recent annual periods. Overall, margins are a clear strength, but the latest top-line trajectory weakens the income statement profile.

Balance Sheet

Leverage appears conservative with TTM (Trailing-Twelve-Months) debt-to-equity around 0.30 (improved from ~0.35–0.48 in prior annual reports), supported by a growing equity base. Profitability on shareholder capital is strong (TTM return on equity ~38.9%), indicating efficient capital use. The main caution is that return on equity has eased from the exceptionally high levels seen earlier, but overall the balance sheet looks solid and becoming less leveraged over time.

Cash Flow

Cash generation is healthy: TTM (Trailing-Twelve-Months) operating cash flow is ~$8.7B and free cash flow is ~$6.2B, with strong TTM free cash flow growth (+870.5%). Operating cash flow modestly exceeds net income (coverage ~1.12), reflecting good earnings quality, though free cash flow conversion is moderate (free cash flow is ~71% of net income) versus higher conversion in several prior annual periods. Overall cash flow is strong, with some variability in conversion and year-to-year free cash flow growth.

Breakdown	TTM	Oct 2025	Oct 2024	Oct 2023	Oct 2022	Oct 2021
Income Statement
Total Revenue	28.21B	28.37B	27.18B	26.52B	25.79B	23.06B
Gross Profit	13.75B	13.81B	12.90B	12.38B	11.99B	10.91B
EBITDA	9.89B	9.65B	8.79B	8.46B	8.26B	7.39B
Net Income	7.84B	7.00B	7.18B	6.86B	6.53B	5.89B
Balance Sheet
Total Assets	37.64B	36.30B	34.41B	30.73B	26.73B	25.82B
Cash, Cash Equivalents and Short-Term Investments	8.51B	8.57B	9.47B	6.87B	2.58B	5.46B
Total Debt	7.19B	7.05B	6.61B	6.00B	5.83B	5.75B
Total Liabilities	15.93B	15.88B	15.41B	14.38B	14.53B	13.58B
Stockholders Equity	21.72B	20.41B	19.00B	16.35B	12.19B	12.25B
Cash Flow
Free Cash Flow	6.19B	5.70B	7.49B	7.59B	4.61B	4.77B
Operating Cash Flow	8.72B	7.96B	8.68B	8.70B	5.40B	5.44B
Investing Cash Flow	-2.67B	-2.78B	-2.33B	-1.53B	-1.36B	-1.22B
Financing Cash Flow	-5.12B	-5.98B	-4.47B	-3.03B	-7.04B	-4.59B

Applied Materials Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 352.46
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AMAT, the sentiment is Positive. The current price of 352.46 is below the 20-day moving average (MA) of 358.74, above the 50-day MA of 334.81, and above the 200-day MA of 237.49, indicating a neutral trend. The MACD of 2.31 indicates Positive momentum. The RSI at 52.83 is Neutral, neither overbought nor oversold. The STOCH value of 70.59 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AMAT.

Applied Materials Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LRCX	80 Outperform	$282.81B	34.75	62.59%	0.56%	25.66%	46.68%
ASML	78 Outperform	$525.90B	30.98	52.14%	0.63%	24.91%	39.95%
TER	77 Outperform	$46.87B	54.64	19.88%	0.24%	4.56%	-15.44%
KLAC	75 Outperform	$194.17B	34.87	95.22%	0.58%	22.27%	45.32%
AMAT	72 Outperform	$279.72B	31.26	38.90%	0.69%	4.47%	0.48%
ASX	63 Neutral	$46.98B	26.78	12.81%	2.29%	8.01%	10.41%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Applied Materials Corporate Events

Applied Materials Shareholders Reaffirm Board, Pay and Auditor

At its Annual Meeting of Shareholders held on March 12, 2026, Applied Materials, Inc. saw all ten board nominees, including CEO Gary E. Dickerson, re-elected to one-year terms, signaling broad investor support for the company’s current governance and strategic direction. Shareholders also approved, on an advisory basis, the compensation of the company’s named executive officers for fiscal year 2025, reflecting backing for its executive pay practices amid ongoing industry investment cycles.

In addition, investors ratified the appointment of KPMG LLP as Applied Materials’ independent registered public accounting firm for fiscal year 2026, reinforcing continuity in financial oversight and audit quality. The voting outcomes collectively underscore shareholder confidence in the company’s leadership, governance framework and financial reporting as it navigates the competitive semiconductor equipment landscape.

The most recent analyst rating on (AMAT) stock is a Buy with a $450.00 price target. To see the full list of analyst forecasts on Applied Materials stock, see the AMAT Stock Forecast page.

Applied Materials Resolves U.S. Export Compliance Allegations

On February 11, 2026, Applied Materials announced that it had reached a civil settlement with the U.S. Department of Commerce’s Bureau of Industry and Security, resolving allegations that certain customer shipments to China between November 2020 and July 2022 violated U.S. Export Administration Regulations due to a misunderstanding of their applicability. Under the agreement, the company will make a one-time payment of $252.5 million and undertake internal audits and training to strengthen export controls compliance.

The company also disclosed that the U.S. Department of Justice and the Securities and Exchange Commission have closed related investigations without taking enforcement action, effectively concluding the U.S. government’s review of the matter. Applied said that putting the issue behind it serves the interests of customers, employees and shareholders, and allows management to refocus on executing its technology roadmap and meeting rising demand for next-generation semiconductor innovation.

The most recent analyst rating on (AMAT) stock is a Buy with a $375.00 price target. To see the full list of analyst forecasts on Applied Materials stock, see the AMAT Stock Forecast page.