Applied Materials (AMAT) AI Stock Analysis

• Market Cap: $295.46B
• Dividend Yield: 0.69%
• Average Volume (3M): 8.04M
• Price to Earnings (P/E): 38.1
• Beta (1Y): 1.79
• 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: 7,939,907
• 30 Day Avg. Volume: 8,037,047
• 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: 10.47
• Enterprise Value/Gross Profit: 21.49
• Enterprise Value/Ebitda: 29.88
• 1Y Price Target: $428.84
• Price Target Upside: 15.19% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 27
• EPS Forecast (FY): 10.99
• Revenue Forecast (FY): $31.35B

• Rating: 76 Outperform
• Price Target: $418.00 ▲(12.28% Upside)
• Action: Reiterated Date: 02/21/26
• Date: Action: Reiterated 02/21/26

AMAT scores well on core fundamentals and sentiment: strong margins, cash generation, and a solid balance sheet are supported by a positive earnings-call outlook tied to AI and DRAM/HBM demand. The score is capped by a premium valuation (high P/E, low yield) and risk signals around sharp TTM revenue decline and China/export-control exposure, despite strong technical momentum.

Positive Factors

High profitability and margins

Applied’s sustained high gross, net and EBIT margins reflect durable technology differentiation and pricing power across deposition, etch, metrology and packaging. Those margins provide a structural cushion through cycles, fund R&D and capacity, and support long-term reinvestment and returns.

Strong cash generation and conservative leverage

Robust operating cash flow and free cash flow, combined with a low trailing debt-to-equity ratio, give Applied durable financial flexibility. This supports multi-year R&D, capital expansion, buybacks/dividends and the ability to absorb cyclicality without forcing dilutive financing.

Technology leadership and secular AI/DRAM demand

Management cites broad AI-driven WFE demand, a DRAM/HBM-led recovery and momentum in advanced packaging and metrology. These secular trends raise tool intensity per wafer and expand long-term service/software attach, anchoring durable growth beyond near-term cycle swings.

Negative Factors

Sharp recent revenue decline

A very large trailing revenue decline signals pronounced cyclicality tied to customer capex timing and node transitions. Such top-line volatility reduces visibility, can erode operating leverage if prolonged, and makes multi-quarter planning and demand predictability more challenging.

China exposure and export-control impact

Export-control constraints and the recent compliance settlement reflect a structural risk to revenue from China and added compliance costs. Even with DOJ/SEC closures, restricted addressability, customer hesitancy and policy-driven demand shifts can persist and limit growth in a key end market.

Backlog/book-to-bill and timing uncertainty

An elevated backlog but book-to-bill near 1.0 and acknowledged timing shifts indicate order intake is only matching shipments. Long qualification cycles, customer concentration and supply constraints can delay revenue realization, limiting near-term upside from backlog.

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

High-quality 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 key offset is the very weak TTM revenue growth (-54.3%), which raises near-term cyclicality/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: 372.30
• 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 372.3 is above the 20-day moving average (MA) of 345.67, above the 50-day MA of 311.43, and above the 200-day MA of 225.48, indicating a bullish trend. The MACD of 20.39 indicates Negative momentum. The RSI at 63.39 is Neutral, neither overbought nor oversold. The STOCH value of 84.00 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
LRCX	80 Outperform	$292.08B	47.94	65.56%	0.56%	25.66%	46.68%
ASML	78 Outperform	$556.77B	51.96	51.52%	0.63%	24.91%	39.95%
KLAC	77 Outperform	$199.83B	44.29	100.73%	0.58%	22.27%	45.32%
TER	77 Outperform	$51.52B	94.87	19.73%	0.24%	4.56%	-15.44%
AMAT	76 Outperform	$295.46B	38.13	38.86%	0.69%	4.47%	0.48%
ASX	63 Neutral	$54.00B	40.41	12.53%	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 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.