Applied Materials (AMAT) AI Stock Analysis

• Market Cap: $207.67B
• Dividend Yield: 0.69%
• Average Volume (3M): 6.91M
• Price to Earnings (P/E): 30.2
• Beta (1Y): 1.85
• Revenue Growth: 4.47%
• EPS Growth: 0.48%
• Country: US
• Employees: 36,000
• Sector: Technology
• Sector Strength: 88
• Industry: Semiconductors
• EPS (TTM): 2.17
• Shares Outstanding: 792,943,360
• 10 Day Avg. Volume: 6,570,110
• 30 Day Avg. Volume: 6,912,145
• 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: 0.88
• Enterprise Value/Revenue: 6.45
• Enterprise Value/Gross Profit: 13.25
• Enterprise Value/Ebitda: 18.96
• 1Y Price Target: $273.84
• Price Target Upside: 4.56% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 22
• EPS Forecast (FY): 9.54
• Revenue Forecast (FY): $28.90B

• Rating: 77 Outperform
• Price Target: $304.00 ▲(16.07% Upside)

Applied Materials' strong financial performance and positive earnings outlook are significant strengths. However, technical indicators suggest potential overvaluation, and corporate events pose risks, particularly regarding trade restrictions and workforce adjustments.

Positive Factors

Strong Financial Health

The company's strong financial health ensures it can withstand economic fluctuations and invest in growth opportunities, supporting long-term stability.

Leadership in AI-Driven Segments

Leadership in AI-driven segments positions the company to capitalize on growing demand, driving future revenue and market share expansion.

Advanced Packaging Business Growth

Growth in advanced packaging enhances product offerings and market competitiveness, contributing to sustained revenue growth.

Negative Factors

Impact of Trade Restrictions

Trade restrictions limit market access, reducing revenue potential and impacting long-term growth in a key market.

Workforce Reduction Plan

Workforce reductions may impact morale and productivity, potentially hindering innovation and operational efficiency in the long term.

China Revenue Decline

Declining revenue from China indicates challenges in a major market, affecting overall revenue growth and market positioning.

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 generates revenue primarily through the sale of semiconductor manufacturing equipment, which includes systems for wafer fabrication, etching, and deposition. Revenue is also derived from Applied Global Services, which offers maintenance, spare parts, and upgrades for existing equipment, providing a steady stream of income. Additionally, the company earns from display technologies and solar equipment, although these represent a smaller portion of its overall revenue. Key partnerships with major semiconductor manufacturers and technology firms contribute to its earnings, as does the increasing demand for advanced technologies in areas such as artificial intelligence, 5G, and IoT, which drive investment in semiconductor production. Furthermore, Applied Materials benefits from a recurring revenue model through its services segment, enhancing its financial stability.

Applied Materials Financial Statement Overview

Summary

Applied Materials exhibits strong financial health with solid profitability, stable leverage, and robust cash flow generation. Challenges include a slight decline in revenue growth and stagnation in free cash flow expansion.

Income Statement

Applied Materials demonstrates strong profitability with a consistent gross profit margin around 47-48% and a solid net profit margin of approximately 25-26%. However, the recent TTM data shows a slight decline in revenue growth, indicating potential challenges in maintaining growth momentum.

Balance Sheet

The company's balance sheet is stable with a manageable debt-to-equity ratio around 0.32-0.45, indicating prudent leverage. Return on equity remains robust, although it has slightly decreased over the years, reflecting a strong ability to generate returns on shareholder investments.

Cash Flow

Applied Materials maintains healthy cash flow metrics with a strong operating cash flow to net income ratio close to 1, and a free cash flow to net income ratio around 0.78-0.87. However, recent stagnation in free cash flow growth suggests potential areas for improvement in cash generation.

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

Applied Materials Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 261.90
• 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 261.9 is below the 20-day moving average (MA) of 261.92, above the 50-day MA of 242.89, and above the 200-day MA of 189.18, indicating a neutral trend. The MACD of 5.11 indicates Positive momentum. The RSI at 57.73 is Neutral, neither overbought nor oversold. The STOCH value of 64.58 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
ASML	81 Outperform	$404.71B	40.14	51.72%	0.63%	24.91%	39.95%
AMAT	77 Outperform	$207.67B	30.24	35.51%	0.69%	4.47%	0.48%
KLAC	77 Outperform	$168.13B	40.17	99.17%	0.58%	22.27%	45.32%
LRCX	77 Outperform	$223.66B	39.24	62.26%	0.56%	25.66%	46.68%
TER	71 Outperform	$31.15B	72.39	15.77%	0.24%	4.56%	-15.44%
ASX	69 Neutral	$33.39B	30.25	11.17%	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 Announces Workforce Reduction Plan

On October 23, 2025, Applied Materials announced a workforce reduction plan affecting approximately four percent of its global workforce to enhance competitiveness and productivity. The company anticipates incurring charges between $160 million to $180 million, primarily for severance and termination benefits, with most charges recognized in the fourth quarter of fiscal 2025. The plan aims to position Applied Materials for future growth by simplifying organizational structures and adopting new technologies.

The most recent analyst rating on (AMAT) stock is a Buy with a $257.00 price target. To see the full list of analyst forecasts on Applied Materials stock, see the AMAT Stock Forecast page.

Applied Materials Faces New Export Restrictions Impact

On September 29, 2025, the U.S. Department of Commerce’s Bureau of Industry and Security issued a new rule expanding export restrictions, impacting Applied Materials‘ ability to export certain products to China-based customers. This rule is expected to reduce Applied Materials’ net revenue by approximately $110 million in the fourth quarter of fiscal 2025 and by $600 million in fiscal 2026, highlighting significant financial implications for the company.

The most recent analyst rating on (AMAT) stock is a Buy with a $240.00 price target. To see the full list of analyst forecasts on Applied Materials stock, see the AMAT Stock Forecast page.