Applied Materials (AMAT) AI Stock Analysis

• Market Cap: $144.44B
• Dividend Yield: 0.92%
• Average Volume (3M): 6.26M
• Price to Earnings (P/E): 21.9
• Beta (1Y): 1.74
• Revenue Growth: 6.12%
• EPS Growth: -5.66%
• Country: US
• Employees: 36,000
• Sector: Technology
• Sector Strength: 92
• Industry: Semiconductors
• EPS (TTM): 2.39
• Shares Outstanding: 802,498,200
• 10 Day Avg. Volume: 6,228,989
• 30 Day Avg. Volume: 6,261,116
• PEG Ratio: 3.35
• Price to Book (P/B): 8.07
• Price to Sales (P/S): 5.64
• P/FCF Ratio: 20.47
• Enterprise Value/Market Cap: 0.85
• Enterprise Value/Revenue: 4.38
• Enterprise Value/Gross Profit: 9.10
• Enterprise Value/Ebitda: 13.71
• 1Y Price Target: $205.61
• Price Target Upside: 14.77% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 27

• Rating: 80 Outperform
• Price Target: $215.00 ▲(20.01% Upside)

Applied Materials is performing well across key components, with particularly strong financial performance and positive earnings call guidance boosting its overall score. Despite moderate valuation and some challenges in China due to trade restrictions, the company's advancements in AI technologies and strategic growth initiatives provide a solid foundation for future potential.

Positive Factors

China Revenue

AMAT has de-risked China sales by expecting China revenue to be in the mid-20s, reducing concerns about decreasing foreign equipment spending in China.

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.

Valuation

AMAT stock is trading at a sharp P/E discount to peers, indicating potential for closing the valuation gap.

Negative Factors

Geopolitical Risks

Macro weakness, overdependence on AI semis demand, and geopolitical risks due to policy changes on China/Taiwan are the biggest risks to WFE expectations.

Growth Challenges

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

Revenue Forecast

The revenue forecast for leading logic and DRAM is more conservative than street expectations, contributing to a less optimistic outlook.

Applied Materials Business Overview & Revenue Model

Company Description

Applied Materials, Inc. is a leading global company that provides manufacturing equipment, services, and software to the semiconductor, display, and related industries. The company operates in three primary segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. Applied Materials is renowned for its innovative solutions that help customers produce advanced chips and display technologies, thereby enabling smarter, more powerful electronics.

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 shows a robust financial position with strong revenue growth, high profitability margins, and effective cash flow management. The company's low leverage and high return on equity underscore its financial stability. Despite the possibility of improving the equity ratio, the overall financial health is solid, with opportunities for continued growth and resilience in the semiconductor industry.

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
EBITDA	8.97B	8.79B	8.46B	8.26B	7.39B	4.78B
Net Income	6.76B	7.18B	6.86B	6.53B	5.89B	3.62B
Balance Sheet
Total Assets	33.63B	34.41B	30.73B	26.73B	25.82B	22.35B
Cash, Cash Equivalents and Short-Term Investments	6.75B	9.47B	6.87B	2.58B	5.46B	5.74B
Total Debt	6.67B	6.61B	6.00B	5.83B	5.75B	5.71B
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	5.86B	7.49B	7.59B	4.61B	4.77B	3.38B
Operating Cash Flow	7.46B	8.68B	8.70B	5.40B	5.44B	3.80B
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 Price: 179.15
• 50DMA: Negative
• 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 Negative. The current price of 179.15 is below the 20-day moving average (MA) of 189.81, below the 50-day MA of 179.91, and above the 200-day MA of 169.62, indicating a neutral trend. The MACD of -0.21 indicates Positive momentum. The RSI at 41.39 is Neutral, neither overbought nor oversold. The STOCH value of 34.22 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AMAT.

Applied Materials Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
KLAC	83 Outperform	$117.25B	29.19	100.78%	0.76%	24.06%	49.69%
LRCX	82 Outperform	$123.27B	23.22	58.24%	0.95%	23.68%	43.16%
AMAT	80 Outperform	$144.44B	21.91	36.37%	0.92%	6.12%	-5.66%
MU	77 Outperform	$117.37B	18.93	13.11%	0.44%	58.22%	―
ADI	70 Outperform	$110.02B	60.36	5.21%	1.72%	-6.17%	-14.16%
Sector *	62 Neutral	$34.80B	6.83	-10.77%	2.06%	6.36%	-8.52%
INTC	49 Neutral	$84.52B	―	-19.24%	2.59%	-3.72%	-2120.70%

Applied Materials Corporate Events

Applied Materials Appoints James Anderson to Board

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.

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.