Applied Materials (AMAT) AI Stock Analysis

• Market Cap: $213.50B
• Dividend Yield: 0.66%
• Average Volume (3M): 7.76M
• Price to Earnings (P/E): 30.9
• Beta (1Y): 1.87
• 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: 796,642,460
• 10 Day Avg. Volume: 6,460,519
• 30 Day Avg. Volume: 7,756,295
• PEG Ratio: 77.49
• Price to Book (P/B): 9.18
• Price to Sales (P/S): 6.61
• P/FCF Ratio: 32.18
• Enterprise Value/Market Cap: 0.85
• Enterprise Value/Revenue: 6.36
• Enterprise Value/Gross Profit: 13.07
• Enterprise Value/Ebitda: 18.71
• 1Y Price Target: $261.74
• Price Target Upside: -2.34% Downside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 21
• EPS Forecast (FY): 9.51
• Revenue Forecast (FY): $28.87B

• Rating: 78 Outperform
• Price Target: $306.00 ▲(14.18% Upside)

Applied Materials' strong financial performance and positive earnings outlook are key strengths, supported by robust growth in AI-driven segments. However, valuation concerns and potential overbought technical indicators pose risks. The impact of trade restrictions and workforce reductions are notable challenges, but the company's strategic positioning and innovation focus provide a solid foundation for future growth.

Positive Factors

Strong Position in AI-Driven Segments

Dominance in AI-driven segments positions Applied Materials for sustained growth as demand for AI technologies continues to rise, ensuring a competitive edge in the semiconductor industry.

Advanced Packaging Business Growth

Growth in advanced packaging reflects strategic alignment with industry trends, enhancing Applied Materials' market position and revenue potential in high-bandwidth memory technologies.

Significant New Product Launches

New product launches demonstrate Applied Materials' innovation leadership, strengthening its technological capabilities and supporting long-term competitiveness in critical semiconductor processes.

Negative Factors

Impact of Trade Restrictions

Trade restrictions limit Applied Materials' revenue potential in a key market, posing challenges to growth and market share in the semiconductor industry.

Workforce Reduction Plan

Workforce reductions may indicate operational challenges and could impact employee morale, potentially affecting productivity and innovation over the long term.

Challenges in ICAPS Market

Challenges in the ICAPS market could hinder growth, as this segment faces potential slowdowns despite strengths in other areas, impacting overall revenue momentum.

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 in revenue growth and free cash flow expansion slightly temper the overall performance.

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 2025	Dec 2024	Dec 2024	Dec 2023
Income Statement
Total Revenue	―	28.37B	―	27.18B	―
Gross Profit	―	13.81B	―	12.90B	―
EBITDA	―	9.65B	―	8.79B	―
Net Income	―	7.00B	―	7.18B	―
Balance Sheet
Total Assets	―	36.30B	―	34.41B	―
Cash, Cash Equivalents and Short-Term Investments	―	8.57B	―	9.47B	―
Total Debt	―	6.55B	―	6.61B	―
Total Liabilities	―	15.88B	―	15.41B	―
Stockholders Equity	―	20.41B	―	19.00B	―
Cash Flow
Free Cash Flow	―	5.70B	―	7.49B	―
Operating Cash Flow	―	7.96B	―	8.68B	―
Investing Cash Flow	―	-2.78B	―	-2.33B	―
Financing Cash Flow	―	-5.98B	―	-4.47B	―

Applied Materials Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 268.00
• 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 268 is above the 20-day moving average (MA) of 240.23, above the 50-day MA of 230.00, and above the 200-day MA of 181.81, indicating a bullish trend. The MACD of 11.37 indicates Negative momentum. The RSI at 69.98 is Neutral, neither overbought nor oversold. The STOCH value of 94.07 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
ASML	81 Outperform	$423.31B	41.14	51.72%	0.61%	24.91%	39.95%
AMAT	78 Outperform	$213.50B	30.95	35.51%	0.66%	4.47%	0.48%
TER	78 Outperform	$31.44B	73.07	15.77%	0.24%	4.56%	-15.44%
KLAC	77 Outperform	$159.57B	38.13	99.17%	0.61%	22.27%	45.32%
LRCX	77 Outperform	$199.33B	34.97	62.26%	0.62%	25.66%	46.68%
ASX	69 Neutral	$32.21B	29.27	11.17%	2.34%	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.

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.

Applied Materials Secures $2 Billion Credit Facility

On September 25, 2025, Applied Materials entered into a credit agreement for a $2.0 billion revolving credit facility with Bank of America, allowing for potential expansion up to $3.0 billion. This agreement, which includes various interest rate options and covenants, is intended for general corporate purposes and reflects Applied’s strategic financial planning to support its operations and growth.

Applied Materials Completes $1 Billion Notes Offering

On September 18, 2025, Applied Materials completed a public offering of $1 billion in senior unsecured notes, with $550 million due in 2031 and $450 million due in 2036. The proceeds will be used to repay existing debt and for general corporate purposes, enhancing the company’s financial flexibility. The issuance includes covenants that restrict certain financial activities, and the notes may be subject to repurchase or redemption under specific conditions.

Yvonne McGill Resigns from Applied Materials Board

Yvonne McGill resigned from the Board of Directors of Applied Materials, Inc., effective September 12, 2025. Her resignation was not due to any disagreement with the company’s operations, policies, or practices.