In an era where technology shapes our everyday world, Applied Materials, Inc. stands at the forefront of semiconductor innovation, powering everything from smartphones to advanced AI systems. With a robust portfolio that includes cutting-edge manufacturing equipment and software, this company is not just a participant in the semiconductor industry—it’s a game changer. As we delve into this analysis, I invite you to consider whether Applied Materials’ strong fundamentals and market positioning continue to justify its current valuation and growth trajectory.
Table of contents
Company Description
Applied Materials, Inc. (NASDAQ: AMAT), founded in 1967 and headquartered in Santa Clara, California, is a global leader in the semiconductor industry. The company specializes in manufacturing equipment, services, and software that support the production of semiconductor chips, displays, and related technologies. Its operations are divided into three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets, catering to a diverse clientele across the U.S., China, Korea, Taiwan, Japan, Southeast Asia, and Europe. With a workforce of 36K employees, Applied Materials plays a pivotal role in driving innovation and efficiency in semiconductor manufacturing, positioning itself as a key player in shaping the future of technology.
Fundamental Analysis
In this section, I will conduct a fundamental analysis of Applied Materials, Inc., focusing on its income statement, financial ratios, and dividend payout policy.
Income Statement
The following table summarizes the income statement for Applied Materials, Inc. (AMAT), displaying key financial metrics over the past few years.
| 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 | 11.93B | 12.38B | 12.90B | 13.81B |
| EBITDA | 7.39B | 8.26B | 8.46B | 8.79B | 9.65B |
| EBIT | 7.01B | 7.83B | 7.95B | 8.40B | 9.54B |
| Interest Expense | 0.24B | 0.23B | 0.24B | 0.25B | 0.27B |
| 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 |
Interpretation of Income Statement
Over the past five years, Applied Materials has experienced steady revenue growth, increasing from 23.06B in 2021 to 28.37B in 2025. While net income showed fluctuations, it remained robust with a slight decrease to 6.99B in 2025, compared to 7.18B in 2024. The gross profit margin has remained relatively stable, indicating effective cost management. In 2025, the EBITDA has increased significantly to 9.65B, reflecting improved operational efficiency. However, the decline in net income suggests that higher operating expenses may have impacted profitability, warranting close monitoring in future quarters.
Financial Ratios
Here is a summary of the financial ratios for Applied Materials, Inc. (AMAT) over the past years.
| Metrics | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Net Margin | 25.53% | 25.31% | 25.86% | 26.41% | 24.67% |
| ROE | 48.08% | 53.51% | 41.94% | 37.77% | 34.28% |
| ROIC | 30.52% | 34.26% | 28.54% | 25.82% | 22.03% |
| P/E | 21.56 | 11.79 | 16.05 | 21.36 | 26.78 |
| P/B | 10.37 | 6.31 | 6.73 | 8.07 | 9.18 |
| Current Ratio | 2.54 | 2.16 | 2.60 | 2.51 | 2.61 |
| Quick Ratio | 1.86 | 1.35 | 1.82 | 1.87 | 1.87 |
| D/E | 0.47 | 0.48 | 0.37 | 0.35 | 0.32 |
| Debt-to-Assets | 22.28% | 21.81% | 19.52% | 19.20% | 18.06% |
| Interest Coverage | 29.19 | 34.16 | 32.16 | 31.85 | 30.81 |
| Asset Turnover | 0.89 | 0.96 | 0.86 | 0.79 | 0.78 |
| Fixed Asset Turnover | 10.35 | 9.56 | 8.28 | 7.32 | 6.15 |
| Dividend Yield | 0.66% | 1.14% | 0.89% | 0.78% | 0.72% |
Interpretation of Financial Ratios
Applied Materials, Inc. (AMAT) demonstrates robust financial health in 2025. The liquidity ratios, with a current ratio of 2.61 and a quick ratio of 1.87, indicate strong short-term financial stability. Solvency is also solid, evidenced by a debt-to-equity ratio of 0.32 and a solvency ratio of 0.45, suggesting manageable debt levels. Profitability is strong, with a net profit margin of 24.67% and an EBITDA margin of 34.02%, although the high price-to-earnings ratio of 26.78 may indicate overvaluation risks. Efficiency ratios such as accounts receivable turnover at 5.47 reflect good asset management. However, the relatively low inventory turnover of 2.46 raises potential concerns regarding stock management.
Evolution of Financial Ratios
Over the past five years, AMAT has shown a trend of improving profitability and liquidity ratios, with notable increases in both the current ratio and net profit margin. However, a slight decline in inventory turnover suggests ongoing challenges in inventory management.
Distribution Policy
Applied Materials, Inc. (AMAT) maintains a balanced distribution strategy. The company pays a dividend of approximately $1.68 per share, yielding around 0.72%. With a payout ratio of 19.26%, it demonstrates prudent cash flow management, supporting sustainable distributions. AMAT also engages in share buybacks, enhancing shareholder value. This dual approach of dividends and repurchases is likely to foster long-term value creation, while maintaining financial flexibility amid market fluctuations.
Sector Analysis
Applied Materials, Inc. is a leading player in the semiconductor industry, providing essential manufacturing equipment and services that enhance chip production efficiency. Its competitive edge lies in advanced technology offerings and a strong global presence.
Strategic Positioning
Applied Materials, Inc. (AMAT) holds a significant position in the semiconductor industry, with a market cap of approximately $213.5B. The company’s key product offerings dominate critical manufacturing processes for semiconductor chips, contributing to a substantial market share amid competitive pressures from firms like ASML and Lam Research. Despite the robust demand for semiconductor equipment, the industry faces challenges from technological disruptions, particularly in advanced chip manufacturing techniques. I remain cautious, considering the volatility in this sector, but AMAT’s diversified portfolio and global presence position it favorably for long-term growth.
Revenue by Segment
The following chart illustrates the revenue distribution by segment for Applied Materials, Inc. during the fiscal year 2024.
In FY 2024, Applied Global Services led revenue generation at $6.23B, reflecting a solid growth trajectory. The Semiconductor Systems segment, contributing $19.91B, remains the largest revenue driver, though growth appears to have moderated compared to previous years. Display and Adjacent Markets, at $885M, has shown slight improvement but is considerably smaller in scale. The overall trend indicates a robust performance from service-oriented segments, yet there’s a need to monitor potential margin pressures amid market fluctuations and competition in semiconductor technologies.
Key Products
Below is a table summarizing the key products offered by Applied Materials, Inc. (AMAT) in the semiconductor and display industries.
| Product | Description |
|---|---|
| Semiconductor Manufacturing Equipment | Advanced machinery for fabricating semiconductor chips, including technologies like chemical vapor deposition and etching. |
| Applied Global Services | Comprehensive solutions for optimizing equipment performance, including spare parts, upgrades, and factory automation software. |
| Display Manufacturing Equipment | Tools and technologies for producing liquid crystal displays (LCDs) and organic light-emitting diodes (OLEDs) for consumer electronics. |
Main Competitors
The competitive landscape in the semiconductor industry is robust, featuring several key players alongside Applied Materials, Inc. Below is a table of the main competitors, ranked by their market capitalization.
| Company | Market Cap |
|---|---|
| Micron Technology, Inc. | 265B |
| Lam Research Corporation | 199B |
| Applied Materials, Inc. | 214B |
| Intuit Inc. | 188B |
| QUALCOMM Incorporated | 187B |
| Intel Corporation | 182B |
| ServiceNow, Inc. | 177B |
| Sony Group Corporation | 168B |
| Texas Instruments Incorporated | 166B |
| KLA Corporation | 160B |
| Arm Holdings plc American Depositary Shares | 149B |
These competitors operate primarily in the global semiconductor market, emphasizing various aspects of technology and manufacturing, from memory products to advanced manufacturing equipment. Each company brings unique strengths, making the sector highly competitive and dynamic.
Competitive Advantages
Applied Materials, Inc. (AMAT) holds a strong competitive edge in the semiconductor manufacturing industry through its comprehensive product offerings and advanced technologies. The company’s diverse segments—Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets—allow it to cater to a broad customer base. Looking ahead, AMAT is strategically positioned to capitalize on emerging technologies such as AI and IoT, which are expected to drive demand for semiconductor chips. This opens up new markets and product opportunities, ensuring sustained growth and innovation in the years to come.
SWOT Analysis
The purpose of this analysis is to evaluate the strengths, weaknesses, opportunities, and threats associated with Applied Materials, Inc. (AMAT).
Strengths
- Strong market position
- Diverse product portfolio
- Experienced management
Weaknesses
- High dependency on semiconductor market
- Significant R&D costs
- Price competition
Opportunities
- Growth in AI and machine learning
- Expansion into emerging markets
- Advancements in display technologies
Threats
- Global supply chain disruptions
- Regulatory challenges
- Intense competition
Overall, Applied Materials demonstrates a solid market presence with substantial growth opportunities, although it must navigate significant industry risks and competitive pressures. A strategic focus on innovation and market expansion could enhance its resilience and performance.
Stock Analysis
Over the past year, Applied Materials, Inc. (AMAT) has demonstrated significant price movements, culminating in a notable bullish trend driven by strong investor interest and positive market sentiment.
Trend Analysis
Analyzing the stock over the past year, AMAT has experienced a remarkable price increase of 77.19%. This substantial rise indicates a bullish trend, characterized by acceleration in price movements. The stock fluctuated between a low of 126.95 and a high of 268.0, with a standard deviation of 27.42 reflecting a moderate level of volatility in its price changes.
Volume Analysis
In the last three months, AMAT has seen a total trading volume of approximately 3.86B, with 2.00B driven by buyers and 1.83B by sellers. The volume trend is increasing, with recent activity showing a buyer dominance percentage of 64.58%. This indicates that investor sentiment is leaning toward buying, suggesting robust market participation and confidence in the stock’s performance.
Analyst Opinions
Recent analyst opinions on Applied Materials, Inc. (AMAT) indicate a consensus rating of “Buy” for 2025. Analysts highlight the company’s strong return on equity (5) and return on assets (5), which suggest robust operational efficiency. However, concerns about its debt-to-equity ratio (2) and price-to-earnings (2) indicate potential risk factors. Notably, analysts from reputable firms have graded AMAT with a B+ rating, reflecting optimism about its long-term growth potential despite some caution regarding valuation metrics.
Stock Grades
Applied Materials, Inc. (AMAT) has recently received a range of evaluations from reliable grading companies, reflecting a generally positive sentiment among analysts.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| UBS | upgrade | Buy | 2025-11-25 |
| Keybanc | maintain | Overweight | 2025-12-02 |
| Mizuho | maintain | Neutral | 2025-11-14 |
| Craig-Hallum | downgrade | Hold | 2025-11-14 |
| JP Morgan | maintain | Overweight | 2025-11-14 |
| Wells Fargo | maintain | Overweight | 2025-11-14 |
| Citigroup | maintain | Buy | 2025-11-14 |
| Morgan Stanley | maintain | Overweight | 2025-11-14 |
| B. Riley Securities | maintain | Buy | 2025-11-14 |
| Cantor Fitzgerald | maintain | Overweight | 2025-11-14 |
Overall, the trend in grades for AMAT displays a mix of upgrades and downgrades, but the prevailing sentiment leans towards maintaining strong positions, with several analysts reiterating their “Overweight” ratings. This indicates a cautious optimism about the stock’s performance moving forward.
Target Prices
The consensus among analysts for Applied Materials, Inc. (AMAT) indicates a balanced outlook on the stock’s future performance.
| Target High | Target Low | Consensus |
|---|---|---|
| 290 | 205 | 255.27 |
Analysts expect the stock to reach a consensus target price of approximately 255.27, suggesting a potential for growth within the projected range.
Consumer Opinions
Consumer sentiment about Applied Materials, Inc. (AMAT) reveals a mix of appreciation for its innovative technologies and concerns regarding customer service.
| Positive Reviews | Negative Reviews |
|---|---|
| “Exceptional product quality and reliability.” | “Customer service response times are slow.” |
| “Innovative solutions that keep us ahead in the market.” | “Pricing is higher compared to competitors.” |
| “Strong support for product integration and maintenance.” | “Occasional software issues affect usability.” |
Overall, consumer feedback highlights Applied Materials’ strong product quality and innovation but points to weaknesses in customer service and pricing competitiveness.
Risk Analysis
In assessing the potential risks associated with investing in Applied Materials, Inc. (AMAT), I have compiled a table that outlines key risk categories, their descriptions, probabilities, and impacts.
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Volatility | Fluctuations in the semiconductor market can affect sales. | High | High |
| Supply Chain Disruptions | Global supply chain issues may delay production and increase costs. | Medium | High |
| Regulatory Changes | New regulations in technology and trade policies may impact operations. | Medium | Medium |
| Competition | Increased competition from emerging technologies can affect market share. | High | Medium |
| Technological Obsolescence | Rapid changes in technology may render current products less competitive. | High | High |
In my analysis, market volatility and technological obsolescence present the most significant risks. The semiconductor market remains sensitive to economic shifts, and the rapid pace of innovation can challenge AMAT’s product relevance.
Should You Buy Applied Materials, Inc.?
Applied Materials, Inc. (AMAT) shows a strong profitability profile with a net profit margin of 24.67% and a return on invested capital (ROIC) of 22.03%. The company’s ability to create value is notable, as this ROIC exceeds its weighted average cost of capital (WACC) of 11.37%, indicating effective capital utilization. Despite a manageable total debt of 6.56B, the fundamentals have demonstrated positive evolution, contributing to a rating of B+. Overall, investors may find AMAT to represent a compelling opportunity, depending on their investment strategy and risk tolerance.
Favorable signals
In my analysis of Applied Materials, Inc. (AMAT), I have identified several favorable elements. The company exhibits a strong gross margin of 48.67%, which indicates effective cost management in relation to revenue. Additionally, it has a favorable net margin of 24.67%, showing a solid ability to convert revenue into profit. The return on equity (ROE) stands at a robust 34.28%, reflecting efficient use of equity to generate earnings. Furthermore, the current ratio of 2.61 and quick ratio of 1.87 suggest strong liquidity, with adequate assets to cover short-term liabilities.
Unfavorable signals
Despite the favorable aspects, there are also some unfavorable signals to consider. The return on invested capital (ROIC) is 22.03%, which is lower than the weighted average cost of capital (WACC) of 11.37%, indicating value destruction. Additionally, the price-to-earnings (P/E) ratio of 26.78 and price-to-book (P/B) ratio of 9.18 suggest that the stock may be overvalued. The net margin growth shows a decline of -6.59%, indicating potential issues in maintaining profitability growth. Lastly, the dividend yield of 0.72% appears low.
Conclusion
Considering the favorable global income statement opinion and the unfavorable ratios evaluation, the current situation might suggest a cautious approach. Given the trends, particularly with recent seller volume greater than buyer volume, it would be prudent to wait for buyers to return before making any investment decisions.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- Applied Materials shares surge for seven consecutive sessions – MSN (Dec 02, 2025)
- Why Applied Materials (AMAT) Stock Is Up Today – Yahoo Finance (Dec 02, 2025)
- Applied Materials, Inc. $AMAT Shares Bought by Groupe la Francaise – MarketBeat (Dec 04, 2025)
- Applied Materials Stock Surges On AI Chip Boom – Forbes (Dec 03, 2025)
- Applied Materials sees bullish views at TD Cowen – Seeking Alpha (Dec 04, 2025)
For more information about Applied Materials, Inc., please visit the official website: appliedmaterials.com
