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Applied Materials (AMAT)
NASDAQ:AMAT
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Applied Materials (AMAT) AI Stock Analysis

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AMAT

Applied Materials

(NASDAQ:AMAT)

Rating:69Neutral
Price Target:
$178.00
▲(8.20% Upside)
Applied Materials' strong financial performance and reasonable valuation are offset by bearish technical indicators and short-term challenges highlighted in the earnings call. The company's long-term growth prospects remain positive, but current market conditions and uncertainties in China present near-term risks.
Positive Factors
AI Portfolio Expansion
Applied Materials is expanding its portfolio of AI-related equipment, supplying critical tools for technologies such as leading-edge logic, high-bandwidth memory, and advanced packaging.
DRAM Performance
DRAM is performing well and is expected to increase by 50% year-over-year, up from a previous forecast of 40%.
Negative Factors
China Revenue Absorption
China's previous large purchases need to be absorbed, leading to expectations of lower revenue for Applied Materials.
Market Share Loss
Applied Materials lost market share in the Semi Systems segment, with its growth lagging behind industry estimates.
Weak Guidance
Applied Materials reported a good quarter but provided weak guidance, indicating challenges ahead.

Applied Materials (AMAT) vs. SPDR S&P 500 ETF (SPY)

Applied Materials Business Overview & Revenue Model

Company DescriptionApplied 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 MoneyApplied Materials generates revenue primarily through the sale of semiconductor manufacturing equipment, which constitutes a significant portion of its income. The company also earns money from services and support agreements, offering maintenance, upgrades, and consulting to customers in the semiconductor and display industries. Key revenue streams include systems sales, which involve selling equipment, and services revenue from ongoing support and upgrades. Additionally, Applied Materials benefits from strategic partnerships with leading technology firms, collaborations in research and development, and an increasing demand for advanced manufacturing capabilities in the semiconductor industry, particularly as the global demand for electronic devices continues to grow.

Applied Materials Key Performance Indicators (KPIs)

Any
Any
Semiconductor Systems Revenue Breakdown
Semiconductor Systems Revenue Breakdown
Analyzes revenue from semiconductor systems, providing insight into demand trends, market share, and the company's competitive position in this critical industry sector.
Chart InsightsApplied Materials' Semiconductor Systems segment shows a recovery in 'Foundry, Logic, and Other' revenue after a dip in 2023, while DRAM revenue has surged, driven by investments in advanced DRAM technologies like DDR-5. Despite challenges in China and trade restrictions, the company projects a 10% year-over-year increase in Semiconductor Systems revenue for the upcoming quarter, supported by AI-driven advancements and strategic co-innovation. Flash Memory revenue remains subdued, but overall, the segment is poised for growth, reflecting strong demand and strategic positioning in the semiconductor market.
Data provided by:Main Street Data

Applied Materials Earnings Call Summary

Earnings Call Date:Aug 14, 2025
(Q3-2025)
|
% Change Since: -12.35%|
Next Earnings Date:Nov 13, 2025
Earnings Call Sentiment Neutral
The earnings call for Applied Materials highlighted record performance and growth in several key areas such as DRAM, advanced packaging, and U.S. manufacturing investments. However, challenges in China and nonlinear demand from leading-edge customers impact short-term visibility and guidance for Q4. Despite these challenges, the company remains confident in its long-term growth opportunities and market position.
Q3-2025 Updates
Positive Updates
Record Performance in Q3 2025
Applied Materials delivered record performance with strong demand across semiconductor systems and services. Total net revenue was approximately $7.3 billion, up 8% year-over-year.
Robust Gross Margin and Earnings
Non-GAAP gross margin was nearly 49%, with record non-GAAP earnings per share of $2.48, up 17% year-over-year.
Strong DRAM Market Share
Revenue from leading-edge DRAM customers is expected to be up around 50% in fiscal 2025, supported by record results for the etch business.
Advanced Packaging Growth
The packaging business is on track to more than double to greater than $3 billion over the next few years.
Investment in U.S. Manufacturing
Applied Materials plans to invest more than $200 million in Arizona, building on over $400 million invested in U.S. manufacturing infrastructure over the past 5 years.
24 Consecutive Quarters of Service Business Growth
The service business has grown for 24 consecutive quarters, with more than two-thirds of service revenue coming from subscriptions.
Negative Updates
Uncertainties in China Business
Sequentially lower revenue and earnings are expected due to uncertainties in the China market, including digestion of capacity and pending export license applications.
Nonlinear Demand from Leading-Edge Customers
Demand from leading-edge customers is down due to market concentration, fab timing, and customers taking longer to commit to orders, leading to a shorter visibility window.
Lower Visibility and Guidance for Q4 2025
For fiscal Q4, total revenue is expected to decrease by 4.9% year-over-year, with non-GAAP EPS decreasing by 9% year-over-year.
Potential Delays in Export Licenses
A backlog of pending export license applications is impacting business trajectory, with no immediate upside expected even if the situation changes.
Company Guidance
In the third fiscal quarter of 2025, Applied Materials reported record performance driven by high demand for semiconductor systems and services, achieving a gross margin of nearly 49% and record non-GAAP EPS of $2.48. However, the company forecasted a sequential decline in revenue and earnings for the fourth quarter, primarily due to uncertainties in its China business and nonlinear demand from leading-edge customers. Despite this, Applied Materials remains on track for mid-single-digit growth in fiscal 2025, marking its sixth consecutive year of revenue growth. The company anticipates a stable revenue contribution from China at around 29% in Q4 and expects overall revenue of $6.7 billion, down 4.9% year-over-year. Challenges include digestion of capacity in China and pending export licenses, with no expected approvals factored into the Q4 outlook. Applied Materials remains optimistic about long-term growth opportunities, emphasizing its leadership in AI-driven sectors and investment in advanced packaging, with a projected doubling of this business segment to over $3 billion in the coming years.

Applied Materials Financial Statement Overview

Summary
Applied Materials exhibits strong financial health with consistent profitability and efficient cash management. Despite a slowdown in revenue growth, the company maintains solid margins and a stable balance sheet. The moderate leverage and strong return on equity highlight effective financial management.
Income Statement
85
Very Positive
Applied Materials demonstrates strong profitability with a consistent gross profit margin around 48% and a net profit margin of approximately 24% in the TTM period. Revenue growth has slowed to 1.87% in the TTM, indicating a potential plateau after previous years of robust growth. The EBIT and EBITDA margins remain healthy, reflecting efficient operational management.
Balance Sheet
78
Positive
The company maintains a stable financial position with a debt-to-equity ratio of 0.35, indicating moderate leverage. Return on equity is strong at 35.84%, showcasing effective use of shareholder funds. The equity ratio is solid, reflecting a well-capitalized balance sheet, though there is a slight increase in debt over the years.
Cash Flow
80
Positive
Cash flow generation is robust, with an operating cash flow to net income ratio of 0.93 in the TTM, indicating strong cash conversion. Free cash flow growth is stagnant, but the free cash flow to net income ratio remains healthy at 0.79, suggesting efficient cash management despite recent growth challenges.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue28.61B27.18B26.52B25.79B23.06B17.20B
Gross Profit13.88B12.90B12.38B11.99B10.91B7.69B
EBITDA9.27B8.79B8.46B8.26B7.39B4.78B
Net Income6.83B7.18B6.86B6.53B5.89B3.62B
Balance Sheet
Total Assets34.21B34.41B30.73B26.73B25.82B22.35B
Cash, Cash Equivalents and Short-Term Investments7.01B9.47B6.87B2.58B5.46B5.74B
Total Debt6.26B6.61B6.00B5.83B5.75B5.71B
Total Liabilities14.71B15.41B14.38B14.53B13.58B11.78B
Stockholders Equity19.50B19.00B16.35B12.19B12.25B10.58B
Cash Flow
Free Cash Flow5.86B7.49B7.59B4.61B4.77B3.38B
Operating Cash Flow7.46B8.68B8.70B5.40B5.44B3.80B
Investing Cash Flow-2.41B-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
Negative
Last Price164.51
Price Trends
50DMA
181.90
Negative
100DMA
168.11
Negative
200DMA
168.38
Negative
Market Momentum
MACD
-6.15
Positive
RSI
37.50
Neutral
STOCH
15.46
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AMAT, the sentiment is Negative. The current price of 164.51 is below the 20-day moving average (MA) of 174.89, below the 50-day MA of 181.90, and below the 200-day MA of 168.38, indicating a bearish trend. The MACD of -6.15 indicates Positive momentum. The RSI at 37.50 is Neutral, neither overbought nor oversold. The STOCH value of 15.46 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AMAT.

Applied Materials Risk Analysis

Applied Materials disclosed 24 risk factors in its most recent earnings report. Applied Materials reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Applied Materials Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
80
Outperform
$128.18B24.1058.24%0.91%23.68%43.16%
78
Outperform
$125.20B64.165.65%1.50%7.08%18.39%
75
Outperform
$116.07B28.66100.78%0.81%24.04%49.69%
69
Neutral
$129.05B19.3735.64%1.05%6.70%-5.95%
67
Neutral
$21.20B20.0910.97%3.55%4.86%6.44%
61
Neutral
$35.62B8.22-10.94%1.88%8.86%-10.36%
58
Neutral
$107.46B-19.24%0.51%-3.72%-2120.70%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
AMAT
Applied Materials
164.51
-26.39
-13.82%
ASX
ASE Technology Holding Co
10.04
0.57
6.02%
ADI
Analog Devices
255.63
32.30
14.46%
INTC
Intel
24.35
4.74
24.17%
KLAC
KLA
888.10
91.52
11.49%
LRCX
Lam Research
103.63
24.05
30.22%

Applied Materials Corporate Events

Executive/Board ChangesBusiness Operations and Strategy
Applied Materials Appoints James Anderson to Board
Positive
Jul 22, 2025

On July 18, 2025, Applied Materials appointed James R. Anderson to its Board of Directors and the Strategy and Investment Committee. Anderson, with over 25 years of experience in the technology and semiconductor sectors, is expected to contribute significantly to the company’s strategic growth and innovation efforts.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 20, 2025