In the rapidly evolving semiconductor industry, two giants stand out: Applied Materials, Inc. (AMAT) and KLA Corporation (KLAC). Both companies play pivotal roles in manufacturing equipment and solutions that drive innovation in this critical sector. I will compare their market strategies, technological advancements, and growth potential. As we delve into their distinct approaches, I’ll help you determine which company might be the more compelling investment opportunity for your portfolio.
Table of contents
Company Overview
Applied Materials, Inc. Overview
Applied Materials, Inc. is a key player in the semiconductor industry, providing advanced manufacturing equipment, services, and software solutions. Established in 1967 and headquartered in Santa Clara, California, the company operates through three primary segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. Applied Materials focuses on optimizing the production of semiconductor chips through innovative technologies such as chemical vapor deposition and metrology tools. With a market cap of approximately $201B and a workforce of around 36,000 employees, Applied Materials has positioned itself as a critical enabler of the semiconductor supply chain, catering to global markets including the U.S., China, and Europe.
KLA Corporation Overview
KLA Corporation, founded in 1975 and based in Milpitas, California, specializes in process control and yield management solutions for the semiconductor sector. The company operates across four segments: Semiconductor Process Control, Specialty Semiconductor Process, PCB, Display and Component Inspection, and Other. KLA’s offerings include sophisticated inspection and metrology tools, which are essential for ensuring the quality and efficiency of semiconductor manufacturing. With a market cap of around $154B and approximately 15,000 employees, KLA is recognized for its critical role in advancing semiconductor technology and maintaining the competitive edge of its clients.
Key similarities and differences
Both Applied Materials and KLA operate in the semiconductor sector, focusing on manufacturing equipment and process control solutions. However, while Applied Materials encompasses a broader range of services, including display technologies, KLA specializes more in yield management and inspection systems. Their distinct focuses highlight a complementary relationship within the industry, catering to different aspects of semiconductor production.
Income Statement Comparison
In this section, I provide a comparative overview of the most recent income statements for Applied Materials, Inc. (AMAT) and KLA Corporation (KLAC) to aid in your investment decision-making.
| Metric | [Company A: AMAT] | [Company B: KLAC] |
|---|---|---|
| Market Cap | 201B | 154B |
| Revenue | 28.37B | 12.16B |
| EBITDA | 9.65B | 5.34B |
| EBIT | 9.54B | 4.95B |
| Net Income | 6.99B | 4.06B |
| EPS | 8.71 | 30.53 |
| Fiscal Year | 2025 | 2025 |
Interpretation of Income Statement
In 2025, Applied Materials reported a revenue increase to 28.37B, showcasing a positive growth trajectory from previous years. KLA Corporation also saw revenue growth, reaching 12.16B. Both companies maintained solid EBITDA margins, with AMAT at 34% and KLAC at 44%. Although AMAT’s net income slightly decreased from the prior year, it remains robust at 6.99B. In contrast, KLAC experienced substantial growth in net income, reflecting improved operational efficiency. Overall, both companies display strong financial health, but AMAT’s slight slowdown in growth warrants closer scrutiny.
Financial Ratios Comparison
The following table presents a comparative analysis of key financial metrics for Applied Materials, Inc. (AMAT) and KLA Corporation (KLAC) as of 2025.
| Metric | AMAT | KLAC |
|---|---|---|
| ROE | 34.3% | 86.6% |
| ROIC | 22.0% | 38.1% |
| P/E | 26.8 | 29.3 |
| P/B | 9.2 | 25.4 |
| Current Ratio | 2.61 | 2.62 |
| Quick Ratio | 1.87 | 1.83 |
| D/E | 0.32 | 1.30 |
| Debt-to-Assets | 18.1% | 37.9% |
| Interest Coverage | 30.8 | 17.2 |
| Asset Turnover | 0.78 | 0.76 |
| Fixed Asset Turnover | 6.15 | 9.70 |
| Payout Ratio | 19.3% | 22.3% |
| Dividend Yield | 0.72% | 0.76% |
Interpretation of Financial Ratios
In comparing these companies, KLA shows a significantly higher ROE and ROIC, indicating superior efficiency in generating profit from equity and invested capital. AMAT’s lower debt levels reflect a more conservative financial strategy, while KLAC’s higher P/E and P/B ratios suggest it is trading at a premium, potentially reflecting higher growth expectations. However, KLAC’s interest coverage ratio indicates it may face more risk in servicing its debt compared to AMAT.
Dividend and Shareholder Returns
Applied Materials, Inc. (AMAT) offers a dividend with a yield of approximately 0.72% and a payout ratio of 19.3%, indicating sustainable distributions. The company also engages in share buybacks, enhancing shareholder value. Conversely, KLA Corporation (KLAC) also pays dividends, with a yield of around 0.76% and a payout ratio of 22.8%. Both companies prioritize shareholder returns while managing risks associated with their distributions, supporting long-term value creation for investors.
Strategic Positioning
Applied Materials, Inc. (AMAT) and KLA Corporation (KLAC) are both major players in the semiconductor industry, with AMAT holding a market cap of approximately $201B and KLAC at around $154B. AMAT specializes in manufacturing equipment for semiconductor fabrication, while KLAC focuses on process control and yield management solutions. Both companies face competitive pressure from emerging technologies and alternative manufacturers, but their established market positions and innovative capabilities allow them to maintain significant market shares.
Stock Comparison
In this section, I will provide an analysis of the stock price movements and trading dynamics for Applied Materials, Inc. (AMAT) and KLA Corporation (KLAC) over the past year, highlighting key trends and price fluctuations that may influence investment decisions.
Trend Analysis
For Applied Materials, Inc. (AMAT), the stock has experienced a significant price change of +69.3% over the past year. This bullish trend is characterized by an acceleration in price performance, with the highest price recorded at 252.25 and the lowest at 126.95. The standard deviation of 26.55 indicates a moderate level of volatility in the stock’s price movements.
In the recent period from September 14, 2025, to November 30, 2025, AMAT further demonstrated a price change of +50.33%, with a standard deviation of 21.15. The trend slope of 5.33 suggests ongoing upward momentum.
For KLA Corporation (KLAC), the stock has shown an impressive price change of +115.96% over the past year, also indicating a bullish trend with acceleration. The highest price reached was 1208.74, while the lowest was 544.31, with a notable standard deviation of 148.89, reflecting higher volatility compared to AMAT.
In the recent period from September 14, 2025, to November 30, 2025, KLAC recorded a price change of +21.93%, with a standard deviation of 76.72 and a trend slope of 15.73, affirming its continued upward trajectory.
Overall, both stocks exhibit strong bullish trends with notable price accelerations, making them potential candidates for investment consideration in the current market landscape.
Analyst Opinions
Recent analyst ratings indicate a consensus of “buy” for Applied Materials, Inc. (AMAT) with a B+ rating, reflecting strong return on equity (5) and return on assets (5), despite lower scores in price-to-earnings (2) and price-to-book (1). KLA Corporation (KLAC) received a solid B rating, also suggesting a buy, bolstered by excellent returns but showing a weaker debt-to-equity score (1). Analysts recommend both stocks as solid additions to portfolios, emphasizing growth potential and operational efficiency.
Stock Grades
Let’s take a look at the recent stock ratings for Applied Materials, Inc. (AMAT) and KLA Corporation (KLAC), which provide insights into how analysts perceive these companies.
Applied Materials, Inc. Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| UBS | upgrade | Buy | 2025-11-25 |
| Citigroup | maintain | Buy | 2025-11-14 |
| Mizuho | maintain | Neutral | 2025-11-14 |
| Needham | maintain | Buy | 2025-11-14 |
| Craig-Hallum | downgrade | Hold | 2025-11-14 |
| JP Morgan | maintain | Overweight | 2025-11-14 |
| Wells Fargo | maintain | Overweight | 2025-11-14 |
| B. Riley Securities | maintain | Buy | 2025-11-14 |
| Cantor Fitzgerald | maintain | Overweight | 2025-11-14 |
| Morgan Stanley | maintain | Overweight | 2025-11-14 |
KLA Corporation Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Citigroup | maintain | Buy | 2025-10-31 |
| Goldman Sachs | maintain | Neutral | 2025-10-30 |
| TD Cowen | maintain | Hold | 2025-10-30 |
| Needham | maintain | Buy | 2025-10-30 |
| UBS | maintain | Neutral | 2025-10-30 |
| Wells Fargo | maintain | Equal Weight | 2025-10-30 |
| JP Morgan | maintain | Overweight | 2025-10-30 |
| Cantor Fitzgerald | maintain | Neutral | 2025-10-30 |
| Barclays | maintain | Overweight | 2025-10-30 |
| Evercore ISI Group | maintain | Outperform | 2025-10-30 |
Overall, AMAT has received a mix of upgrades and downgrades, with a notable upgrade from UBS to a “Buy,” indicating a positive outlook from certain analysts. Meanwhile, KLAC continues to maintain a stable outlook, with most analysts affirming their previous ratings, suggesting investor confidence in its performance.
Target Prices
The consensus target prices for Applied Materials, Inc. (AMAT) and KLA Corporation (KLAC) indicate positive growth expectations from analysts.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Applied Materials, Inc. | 290 | 205 | 249.27 |
| KLA Corporation | 1400 | 1154 | 1286.29 |
For Applied Materials, the consensus target price of 249.27 is slightly below its current price of 252.31, suggesting a cautious outlook. In contrast, KLA’s consensus of 1286.29 significantly exceeds its current price of 1175.47, indicating a more favorable expectation.
Strengths and Weaknesses
The following table summarizes the strengths and weaknesses of Applied Materials (AMAT) and KLA Corporation (KLAC):
| Criterion | Applied Materials (AMAT) | KLA Corporation (KLAC) |
|---|---|---|
| Diversification | Moderate | High |
| Profitability | Strong (net margin: 25%) | Very Strong (net margin: 33%) |
| Innovation | High | Very High |
| Global presence | Strong | Strong |
| Market Share | Significant | Leading |
| Debt level | Moderate (debt/equity: 0.32) | High (debt/equity: 2.02) |
Key takeaways include that KLA Corporation exhibits superior profitability and innovation compared to Applied Materials, while AMAT maintains a more moderate debt level. Understanding these factors can aid in making informed investment decisions.
Risk Analysis
The following table outlines the key risks associated with Applied Materials, Inc. (AMAT) and KLA Corporation (KLAC) based on the most recent fiscal year.
| Metric | Applied Materials, Inc. | KLA Corporation |
|---|---|---|
| Market Risk | High | Moderate |
| Regulatory Risk | Moderate | High |
| Operational Risk | Moderate | Low |
| Environmental Risk | High | Moderate |
| Geopolitical Risk | High | High |
Both companies face significant market and geopolitical risks, particularly in the semiconductor sector, where global supply chain issues and trade tensions can greatly impact operations. With increasing environmental regulations, managing these risks has become crucial for sustained growth.
Which one to choose?
When comparing Applied Materials, Inc. (AMAT) and KLA Corporation (KLAC), both companies show strong fundamentals and a bullish stock trend. AMAT has a higher gross profit margin (48.67%) and an impressive return on equity (34.28%), reflecting solid operational efficiency. KLAC, however, leads with a higher net profit margin (33.41%) and a strong revenue growth rate of 115.96% over the last year.
Analysts have rated AMAT as a B+ while KLAC received a B, indicating a slight edge for AMAT. Furthermore, AMAT’s price-to-earnings ratio (26.78) is more favorable compared to KLAC’s (29.34), suggesting better valuation.
For growth-focused investors, AMAT appears favorable due to its solid margins and robust growth prospects. Conversely, those prioritizing stability may find KLAC’s high profitability appealing. The primary risk for both companies lies in market dependence and competition within the semiconductor industry.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Go further
I encourage you to read the complete analyses of Applied Materials, Inc. and KLA Corporation to enhance your investment decisions:
