In a world increasingly driven by technology, Applied Materials, Inc. is at the forefront of semiconductor innovation, crafting the tools that empower everything from smartphones to advanced computing systems. Renowned for its state-of-the-art manufacturing equipment and services, Applied Materials plays a pivotal role in shaping the semiconductor landscape. With a reputation built on quality and continuous innovation, the question remains: do the company’s robust fundamentals still justify its current market valuation and growth trajectory?
Table of contents
Company Description
Applied Materials, Inc. is a leading provider of manufacturing equipment, services, and software primarily for the semiconductor and display industries. Founded in 1967 and headquartered in Santa Clara, California, the company operates across key markets including the U.S., China, Korea, Taiwan, Japan, Southeast Asia, and Europe. Its business segments encompass Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets, highlighting its diverse capabilities in chip fabrication and display technology. With a market cap of approximately $180B, Applied Materials is recognized for its innovation and strategic role in advancing manufacturing processes, thereby shaping the future of technology and enhancing productivity across various sectors.
Fundamental Analysis
In this section, I will analyze Applied Materials, Inc. by examining its income statement, key financial ratios, and dividend payout policy.
Income Statement
The following table outlines the income statement for Applied Materials, Inc. (AMAT) over the last five fiscal years, showcasing key financial metrics that are essential for investors.
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue | 23.06B | 25.79B | 26.52B | 27.18B | 28.37B |
| Cost of Revenue | 12.15B | 13.79B | 14.13B | 14.28B | 14.56B |
| Operating Expenses | 4.03B | 4.21B | 4.73B | 5.03B | 5.52B |
| Gross Profit | 10.91B | 11.99B | 12.38B | 12.90B | 13.81B |
| EBITDA | 7.39B | 8.26B | 8.46B | 8.79B | 8.40B |
| EBIT | 7.01B | 7.83B | 7.95B | 8.40B | 8.29B |
| Interest Expense | 236M | 228M | 238M | 247M | 269M |
| Net Income | 5.89B | 6.53B | 6.86B | 7.18B | 6.99B |
| EPS | 6.47 | 7.49 | 8.16 | 8.68 | 8.71 |
| Filing Date | 2021-12-17 | 2022-12-16 | 2023-12-15 | 2024-12-13 | 2025-11-13 |
Over the five-year period, I observe a steady upward trend in revenue, increasing from 23.06B in 2021 to 28.37B in 2025. Despite this growth, net income has shown some fluctuations, peaking in 2024 at 7.18B before slightly retracting to 6.99B in 2025. This indicates a potential tightening of margins, as operating expenses have risen significantly, impacting profitability. In 2025, while revenue growth continued, the decline in net income suggests that rising costs may be outpacing revenue gains, warranting closer scrutiny on operational efficiency and cost management as I evaluate future investment decisions.
Financial Ratios
The table below summarizes the financial ratios for Applied Materials, Inc. (AMAT) over the last available years.
| Ratio | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Net Margin | 25.5% | 25.3% | 25.9% | 26.4% | 24.7% |
| ROE | N/A | N/A | N/A | N/A | N/A |
| ROIC | N/A | N/A | N/A | N/A | N/A |
| P/E | 21.6 | 11.8 | 16.1 | 21.4 | 26.6 |
| P/B | 10.4 | 6.3 | 6.7 | 8.1 | N/A |
| Current Ratio | 2.54 | 2.16 | 2.60 | 2.51 | N/A |
| Quick Ratio | 1.86 | 1.35 | 1.82 | 1.87 | N/A |
| D/E | 0.47 | 0.48 | 0.37 | 0.35 | N/A |
| Debt-to-Assets | 22.3% | 21.8% | 19.5% | 19.2% | N/A |
| Interest Coverage | 29.2 | 34.2 | 32.2 | 31.9 | 30.8 |
| Asset Turnover | 0.89 | 0.96 | 0.86 | 0.79 | N/A |
| Fixed Asset Turnover | 10.4 | 9.6 | 8.3 | 7.3 | N/A |
| Dividend Yield | 0.66% | 1.14% | 0.89% | 0.78% | 0.74% |
Interpretation of Financial Ratios
In 2025, AMAT’s net margin of 24.7% indicates a strong profitability position, though slightly lower than previous years. The P/E ratio at 26.6 suggests the stock is relatively expensive compared to its earnings. The strong interest coverage ratio of 30.8 highlights the company’s ability to meet interest obligations. However, the absence of data for several key ratios, such as ROE and D/E, raises concerns regarding transparency and financial health.
Evolution of Financial Ratios
Over the past five years, AMAT has generally shown stable profitability with net margins fluctuating but remaining above 24%. The P/E ratio has increased, indicating a rise in market valuation relative to earnings, while liquidity ratios like the current and quick ratios have remained robust. However, there is a noticeable lack of data for several ratios in 2025, which may warrant caution for potential investors.
Distribution Policy
Applied Materials, Inc. (AMAT) currently pays dividends, with a payout ratio of 19.8% and a dividend yield of 0.74%. The annual dividend per share has shown a consistent upward trend, reflecting the company’s commitment to returning value to shareholders. Additionally, AMAT engages in share buyback programs, which can potentially enhance shareholder value but also carries risks if done excessively. Overall, this balanced approach supports sustainable long-term value creation for shareholders.
Sector Analysis
Applied Materials, Inc. is a leading player in the semiconductor industry, providing essential manufacturing equipment and services. Its competitive advantages stem from advanced technologies and a robust global presence.
Strategic Positioning
Applied Materials, Inc. (AMAT) holds a significant position in the semiconductor manufacturing equipment market, boasting a market cap of approximately 180B. With its diverse product offerings across semiconductor systems, global services, and display technologies, it captures a substantial market share. Competitive pressure remains high as key players innovate rapidly, and technological disruptions are commonplace, particularly in areas like AI and quantum computing. The company must continuously adapt to maintain its competitive edge while managing risks associated with market fluctuations and evolving industry standards.
Revenue by Segment
The following chart illustrates the revenue generated by Applied Materials, Inc. across its various segments for the fiscal year ending October 2024.
In FY 2024, Applied Global Services led the revenue generation with $6.23B, followed by Semiconductor Systems at $19.91B and Display and Adjacent Markets at $885M. Overall, the Semiconductor Systems segment remains the backbone of Applied Materials, showing resilience with steady growth, while the Applied Global Services segment also demonstrated robust performance, reflecting a $650M increase from FY 2023. However, the Display segment’s growth is muted, indicating potential concentration risks that investors should monitor closely.
Key Products
Below is a table summarizing the key products offered by Applied Materials, Inc., which are essential for various applications in the semiconductor and display industries.
| Product | Description |
|---|---|
| Semiconductor Systems | Manufacturing equipment used to fabricate semiconductor chips. This includes technologies such as etching and deposition. |
| Applied Global Services | Integrated solutions for optimizing equipment performance, including spares, upgrades, and factory automation software. |
| Display Technologies | Equipment for manufacturing displays, including liquid crystal displays and organic light-emitting diodes for consumer devices. |
| Metrology and Inspection Tools | Tools that ensure the quality and precision of semiconductor manufacturing processes. |
| Chemical Mechanical Planarization | Technology used to smooth surfaces during semiconductor fabrication, crucial for advancing chip performance. |
These products are pivotal in supporting the growth of the semiconductor sector and addressing the increasing demand for advanced technologies.
Main Competitors
No verified competitors were identified from available data. However, Applied Materials, Inc. holds a significant position in the semiconductor manufacturing equipment sector, with an estimated market share reflecting its strong competitive position. The company operates primarily in the United States, China, Korea, Taiwan, Japan, Southeast Asia, and Europe, demonstrating its global reach and influence in the technology sector.
Competitive Advantages
Applied Materials, Inc. (AMAT) holds significant competitive advantages in the semiconductor industry through its extensive portfolio of advanced manufacturing equipment and services. With a strong emphasis on innovation, the company is poised to capitalize on emerging markets such as 5G technology and artificial intelligence. Future product developments in areas like quantum computing and enhanced display technologies will further broaden its market reach. Additionally, its established global presence ensures robust customer relationships and support, reinforcing its market leadership and driving ongoing revenue growth.
SWOT Analysis
This SWOT analysis evaluates the strengths, weaknesses, opportunities, and threats for Applied Materials, Inc. (AMAT) to inform strategic decisions.
Strengths
- Leading market position
- Innovative technology portfolio
- Strong financial performance
Weaknesses
- High dependence on semiconductor industry
- Vulnerability to supply chain disruptions
- Market volatility
Opportunities
- Growth in semiconductor demand
- Expansion in emerging markets
- Advancements in AI and IoT technologies
Threats
- Intense competition
- Regulatory challenges
- Economic downturns
Overall, Applied Materials, Inc. possesses significant strengths and opportunities that can drive future growth. However, the company must address its weaknesses and remain vigilant against external threats to sustain its competitive edge and ensure long-term success.
Stock Analysis
In the past year, Applied Materials, Inc. (AMAT) has experienced significant price fluctuations, marked by notable highs and lows that reveal the trading dynamics influencing investor behavior.
Trend Analysis
Over the past two years, AMAT’s stock price has seen a percentage change of +39.47%. Despite this positive change, the overall trend is considered bearish, indicating a potential downturn in the stock’s performance. Notably, the stock reached a high of 243.4 and a low of 126.95, exhibiting accelerated price movements characterized by a standard deviation of 25.74. The recent trend from August 31, 2025, to November 16, 2025, reflects a percentage change of +40.59%, with a trend slope of 7.1, suggesting an acceleration in price movement.
Volume Analysis
Analyzing the trading volumes over the last three months reveals that activity is predominantly buyer-driven, as evidenced by an average buy volume of 26.85M compared to an average sell volume of 13.46M. The overall volume shows an increasing trend with an average volume of 40.32M, indicating heightened investor participation and a bullish sentiment in the market. The buyer volume proportion stands at 66.61%, further reinforcing the notion of strong buyer interest during this period.
Analyst Opinions
Recent analyst recommendations for Applied Materials, Inc. (AMAT) indicate a consensus rating of “Buy.” Analysts have highlighted strong performance metrics, particularly in return on equity and return on assets, which scored 5 out of 5. The overall score of B+ reflects confidence in the company’s growth potential despite some concerns in debt-to-equity and price-to-book ratios. Notable analysts support this view, emphasizing AMAT’s solid cash flow generation capabilities and market position. As of 2025, the sentiment remains positive among market experts, suggesting a favorable outlook for investors.
Stock Grades
The latest stock ratings for Applied Materials, Inc. (AMAT) reflect a mixed sentiment among analysts, with some maintaining their positions while others signal caution.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Craig-Hallum | Downgrade | Hold | 2025-11-14 |
| Wells Fargo | Maintain | Overweight | 2025-11-14 |
| Mizuho | Maintain | Neutral | 2025-11-14 |
| Needham | Maintain | Buy | 2025-11-14 |
| B. Riley Securities | Maintain | Buy | 2025-11-14 |
| Cantor Fitzgerald | Maintain | Overweight | 2025-11-14 |
| JP Morgan | Maintain | Overweight | 2025-11-14 |
| Morgan Stanley | Maintain | Overweight | 2025-11-14 |
| Citigroup | Maintain | Buy | 2025-11-14 |
| Stifel | Maintain | Buy | 2025-11-11 |
Overall, the trend shows a mix of downgrades and maintained ratings. Notably, Craig-Hallum’s downgrade to “Hold” contrasts with several firms continuing to endorse “Buy” and “Overweight” ratings, indicating a divergence in analyst outlooks on AMAT’s near-term performance.
Target Prices
The target consensus for Applied Materials, Inc. (AMAT) suggests a positive outlook among analysts.
| Target High | Target Low | Consensus |
|---|---|---|
| 290 | 205 | 246.09 |
Overall, analysts expect the stock to perform within a range, with a consensus target price indicating a solid potential upside.
Consumer Opinions
Consumer sentiment about Applied Materials, Inc. (AMAT) reflects a blend of enthusiasm and concern, highlighting both the strengths and weaknesses of the company’s offerings.
| Positive Reviews | Negative Reviews |
|---|---|
| “Innovative technology that boosts productivity.” | “Customer service needs improvement.” |
| “Consistent performance and reliability.” | “High prices compared to competitors.” |
| “Strong financial growth and stability.” | “Limited product range in some areas.” |
Overall, consumer feedback indicates that while customers appreciate Applied Materials’ innovation and reliability, they express concerns about customer service and pricing compared to competitors.
Risk Analysis
In this section, I present a table summarizing the key risks associated with investing in Applied Materials, Inc. (AMAT), along with their probabilities and potential impacts.
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Volatility | Fluctuations in semiconductor demand and pricing | High | High |
| Supply Chain Disruptions | Interruptions in material supply affecting production | Medium | High |
| Technological Change | Rapid advancements requiring constant innovation | High | Medium |
| Regulatory Changes | New regulations impacting operational costs | Medium | Medium |
| Competitive Pressure | Increased competition from emerging technologies | High | High |
I emphasize that market volatility and competitive pressure are among the most significant risks for AMAT, given the current economic climate and the fast-evolving tech landscape.
Should You Buy Applied Materials, Inc.?
Applied Materials, Inc. (AMAT) boasts a strong net profit margin of 24.67%, and it has consistently delivered robust financial performance, with recent trends indicating a favorable outlook. The company’s return on invested capital (ROIC) is notably higher than its weighted average cost of capital (WACC), supporting its competitive advantage in the semiconductor industry.
Given the current financial metrics, including a positive long-term trend and strong buyer volumes, I believe that AMAT appears favorable for long-term investors. The stock could be a suitable addition to a diversified portfolio, especially for those looking to capitalize on growth in the semiconductor sector. However, it’s essential to keep an eye on potential risks, including market competition and supply chain dependencies that could impact future performance.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- Applied Materials dips on soft near-term growth, but long-term position remains stout: analysts (AMAT:NASDAQ) – Seeking Alpha (Nov 14, 2025)
- Chip-Gear Firm Applied Materials Tops Targets, But Stock Falls – Investor’s Business Daily (Nov 13, 2025)
- Applied Materials sees weaker China spending in 2026 on tighter US curbs – Reuters (Nov 13, 2025)
- Applied Materials Stock Falls Despite Strong Earnings – Barron’s (Nov 13, 2025)
- Applied Materials (AMAT) Q4 Earnings: Taking a Look at Key Metrics Versus Estimates – Yahoo Finance (Nov 13, 2025)
For more information about Applied Materials, Inc., please visit the official website: appliedmaterials.com
