Applied Materials (AMAT) AI Stock Analysis

• Market Cap: $141.68B
• Dividend Yield: 1.04%
• Average Volume (3M): 6.87M
• Price to Earnings (P/E): 21.5
• Beta (1Y): 1.75
• Revenue Growth: 6.12%
• EPS Growth: -5.66%
• Country: US
• Employees: 36,000
• Sector: Technology
• Sector Strength: 84
• Industry: Semiconductors
• EPS (TTM): 2.39
• Shares Outstanding: 802,498,200
• 10 Day Avg. Volume: 5,926,224
• 30 Day Avg. Volume: 6,868,063
• PEG Ratio: 0.75
• Price to Book (P/B): 6.31
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 16.67
• Enterprise Value/Market Cap: 0.57
• Enterprise Value/Revenue: 0.73
• Enterprise Value/Gross Profit: 5.95
• Enterprise Value/Ebitda: 2.34
• 1Y Price Target: $199.97
• Price Target Upside: 14.87% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 22

• Rating: 81 Outperform
• Price Target: $184.00 ▲(5.69%Upside)

Applied Materials demonstrates solid financial health and promising growth prospects, particularly in AI-driven technologies. The company's strong earnings call performance and reasonable valuation are key drivers of the score, despite some technical analysis signals indicating caution. Challenges in the China market and trade restrictions are noted but mitigated by strategic initiatives and innovation focus.

Positive Factors

Customer Performance

Samsung revenue for AMAT increased by 65% year-over-year, indicating strong performance from this major customer.

Inventory Management

AMAT's inventory of finished goods increased compared to previous quarters, which may indicate preparation for future demand.

Revenue Growth

AMAT should see revenue growth from TSMC in the second half of FY25, which is expected to support the stock in the near term.

Negative Factors

Export Restrictions

If all semiconductor equipment shipments and services to China become restricted, there is a potential significant downside to revenue and EPS.

Growth Challenges

Without a growth driver into FY26, there is difficulty in finding material upside for AMAT's stock.

Revenue Decline

The view on DRAM revenue for Applied Materials is bearish, with expectations of a 12% decline year-over-year in FY26.

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 manufacturing equipment and related services in the semiconductor and display industries. The Semiconductor Systems segment is the largest contributor to revenue, driven by the sale of equipment used in the fabrication of semiconductor chips. The Applied Global Services segment provides value-added services, including maintenance, support, and optimization, for existing machines, ensuring ongoing customer engagement and recurring revenue. The Display and Adjacent Markets segment focuses on equipment for manufacturing advanced display technologies. Key revenue streams include equipment sales, service contracts, and software solutions, with significant earnings bolstered by partnerships with leading technology companies and continuous innovation in product offerings.

Applied Materials Financial Statement Overview

Summary

Applied Materials exhibits strong financial performance with robust revenue growth, high profitability margins, and effective cash flow management. The company's low leverage and high return on equity further underline its financial stability, though there is room for improvement with the equity ratio.

Income Statement

Applied Materials demonstrated strong profitability with a consistent increase in revenue over the years, reaching $28.09 billion in TTM. The gross profit margin is robust at 48.14%, and the net profit margin remains healthy at 24.05%. Revenue growth is steady, with a recent increase of 3.36% from the previous year. The EBIT margin of 29.66% and EBITDA margin of 31.20% reflect operational efficiency and strong earnings generation.

Balance Sheet

The company maintains a solid balance sheet with a debt-to-equity ratio of 0.33, indicating low leverage. The return on equity is impressive at 35.63%, showcasing effective management of shareholders' equity. However, the equity ratio stands at 56.37%, indicating a balanced structure of liabilities and equity, but room for improvement in asset financing through equity.

Cash Flow

Applied Materials exhibits strong cash flow generation with a free cash flow of $5.94 billion in TTM. The operating cash flow to net income ratio is a solid 1.08, indicating efficient conversion of earnings into cash. Free cash flow to net income ratio stands at 0.88, reflecting good cash flow health despite a slight decline in free cash flow compared to the previous year.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
28.09B	27.18B	26.52B	25.79B	23.06B	17.20B
	Gross Profit
13.52B	12.90B	12.38B	11.99B	10.91B	7.69B
	EBIT
8.33B	7.87B	7.65B	7.79B	6.89B	4.37B
	EBITDA
8.73B	8.26B	8.46B	8.26B	7.39B	4.78B
	Net Income Common Stockholders
6.76B	7.18B	6.86B	6.53B	5.89B	3.62B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
6.75B	9.47B	6.87B	2.58B	5.46B	5.74B
	Total Assets
33.63B	34.41B	30.73B	26.73B	25.82B	22.35B
	Total Debt
6.26B	6.26B	6.00B	5.83B	5.75B	5.71B
	Net Debt
92.00M	-1.76B	-133.00M	3.83B	758.00M	356.00M
	Total Liabilities
14.67B	15.41B	14.38B	14.53B	13.58B	11.78B
	Stockholders Equity
18.96B	19.00B	16.35B	12.19B	12.25B	10.58B
Cash Flow		Free Cash Flow
5.93B	7.49B	7.59B	4.61B	4.77B	3.38B
	Operating Cash Flow
7.28B	8.68B	8.70B	5.40B	5.44B	3.80B
	Investing Cash Flow
-2.78B	-2.33B	-1.53B	-1.36B	-1.22B	-130.00M
	Financing Cash Flow
-5.98B	-4.47B	-3.03B	-7.04B	-4.59B	-1.34B

Applied Materials Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 174.09
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 174.09 is above the 20-day moving average (MA) of 165.46, above the 50-day MA of 156.55, and above the 200-day MA of 170.51, indicating a bullish trend. The MACD of 4.56 indicates Negative momentum. The RSI at 61.72 is Neutral, neither overbought nor oversold. The STOCH value of 82.24 is Negative, 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
AMAT	81 Outperform	$141.68B	21.49	36.37%	1.04%	6.12%	-5.66%
KLAC	80 Outperform	$118.01B	32.43	104.10%	0.85%	20.44%	44.14%
LRCX	80 Outperform	$119.48B	26.02	53.14%	0.98%	20.33%	31.89%
MU	79 Outperform	$133.93B	28.80	10.10%	0.38%	71.05%	―
ADI	77 Outperform	$115.03B	63.10	5.21%	1.71%	-6.17%	-14.16%
Sector *	62 Neutral	$11.96B	10.09	-7.50%	3.10%	7.33%	-8.11%
INTC	47 Neutral	$90.47B	―	-18.66%	2.41%	-3.97%	-562.40%

Applied Materials Corporate Events

Applied Materials Secures New $2 Billion Credit Facility

On February 24, 2025, Applied Materials, Inc. entered into a new five-year $2.0 billion revolving credit facility with Bank of America, replacing a previous $1.5 billion agreement set to expire in 2026. This strategic financial move enhances Applied’s credit capacity, potentially strengthening its operational flexibility and market position.