In the dynamic semiconductor industry, Applied Materials, Inc. (AMAT) and SkyWater Technology, Inc. (SKYT) stand out as key players with distinct strategies. AMAT leads with comprehensive manufacturing equipment and global scale, while SKYT focuses on specialized semiconductor development and nimble innovation. Both companies address critical market needs, but which offers the most compelling investment potential? This article will help you decide the better fit for your portfolio.
Table of contents
Companies Overview
I will begin the comparison between Applied Materials and SkyWater Technology by providing an overview of these two companies and their main differences.
Applied Materials Overview
Applied Materials, Inc. is a leading provider of manufacturing equipment, services, and software to the semiconductor, display, and related industries. The company operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. It serves global markets including the US, Asia, and Europe, focusing on advanced technologies for semiconductor fabrication and display manufacturing. Headquartered in Santa Clara, California, Applied Materials was founded in 1967.
SkyWater Technology Overview
SkyWater Technology, Inc. offers semiconductor development and manufacturing services, including engineering and process development support to co-create technologies with customers. The company serves diverse industries such as aerospace, defense, automotive, bio-health, and industrial IoT. Incorporated in 2017 and based in Bloomington, Minnesota, SkyWater focuses on silicon-based analog, mixed-signal, power discrete, and rad-hard integrated circuits manufacturing.
Key similarities and differences
Both companies operate in the semiconductor industry and provide manufacturing-related services, but Applied Materials has a broader global presence and a wider product portfolio, including display technologies. SkyWater is smaller, with a focus on specialized semiconductor manufacturing and co-development services for niche markets like aerospace and bio-health. Applied Materials operates multiple segments targeting both equipment and services, while SkyWater primarily focuses on semiconductor manufacturing services.
Income Statement Comparison
The following table compares key income statement metrics for Applied Materials, Inc. and SkyWater Technology, Inc. for their most recent fiscal years.
| Metric | Applied Materials, Inc. (AMAT) | SkyWater Technology, Inc. (SKYT) |
|---|---|---|
| Market Cap | 259B | 1.6B |
| Revenue | 28.4B | 342M |
| EBITDA | 9.65B | 25.3M |
| EBIT | 9.54B | 6.6M |
| Net Income | 7.0B | -6.8M |
| EPS | 8.71 | -0.14 |
| Fiscal Year | 2025 | 2024 |
Income Statement Interpretations
Applied Materials, Inc.
Applied Materials exhibited steady revenue growth from $23B in 2021 to $28.4B in 2025, with net income rising from $5.9B to $7B. Margins remain strong, particularly gross margin near 49% and EBIT margin above 33%. The 2025 year saw moderate revenue growth of 4.4%, EBIT increased 13.6%, but net margin slightly declined, indicating mixed margin performance.
SkyWater Technology, Inc.
SkyWater’s revenue expanded significantly from $140M in 2020 to $342M in 2024, with net losses narrowing from -$20.6M to -$6.8M. Gross margin improved to over 20%, though net margin remains negative at -2%. The most recent year showed robust revenue and profit growth, with an 81.5% improvement in net margin and positive EBIT, reflecting operational progress despite ongoing losses.
Which one has the stronger fundamentals?
Applied Materials displays larger scale, positive net income, and consistently favorable margins with modest recent growth deceleration. SkyWater shows rapid growth and margin improvements but remains unprofitable. While both have favorable income evaluations, Applied Materials’ established profitability contrasts with SkyWater’s shorter track record and ongoing net losses, suggesting differing risk profiles.
Financial Ratios Comparison
The table below presents the most recent key financial ratios for Applied Materials, Inc. (AMAT) and SkyWater Technology, Inc. (SKYT) based on their fiscal year 2025 and 2024 data respectively.
| Ratios | Applied Materials, Inc. (2025) | SkyWater Technology, Inc. (2024) |
|---|---|---|
| ROE | 34.3% | -11.8% |
| ROIC | 21.96% | 3.40% |
| P/E | 26.6 | -100.3 |
| P/B | 9.11 | 11.82 |
| Current Ratio | 2.61 | 0.86 |
| Quick Ratio | 1.87 | 0.76 |
| D/E (Debt-to-Equity) | 0.35 | 1.33 |
| Debt-to-Assets | 19.4% | 24.5% |
| Interest Coverage | 30.8 | 0.74 |
| Asset Turnover | 0.78 | 1.09 |
| Fixed Asset Turnover | 5.54 | 2.07 |
| Payout Ratio | 19.8% | 0% |
| Dividend Yield | 0.74% | 0% |
Interpretation of the Ratios
Applied Materials, Inc.
Applied Materials exhibits strong financial health with 64.29% of its ratios favorable, including a robust net margin of 24.67%, high ROE at 34.28%, and solid return on invested capital of 21.96%. Its liquidity ratios and debt management are also favorable, though valuation metrics like P/E and P/B ratios are less attractive. The company pays dividends with a 0.74% yield, supported by steady payout and free cash flow coverage, indicating manageable distribution risks.
SkyWater Technology, Inc.
SkyWater Technology shows predominantly weak financial ratios, with 71.43% unfavorable indicators such as a negative net margin (-1.98%) and ROE (-11.79%), alongside high WACC (19.77%) and poor liquidity ratios below 1. The company does not pay dividends, reflecting its negative profitability and focus on reinvestment in R&D and growth. Its positive asset turnover suggests operational efficiency, but overall risk remains elevated.
Which one has the best ratios?
Comparing the two, Applied Materials clearly holds superior financial ratios with a majority favorable status, strong profitability, and stable dividend returns. In contrast, SkyWater Technology’s ratios highlight significant challenges including losses, weak liquidity, and no dividend payments, reflecting a less favorable financial position. Thus, Applied Materials stands out with a more balanced and robust ratio profile.
Strategic Positioning
This section compares the strategic positioning of Applied Materials (AMAT) and SkyWater Technology (SKYT), focusing on market position, key segments, and exposure to technological disruption:
Applied Materials, Inc. (AMAT)
- Leading semiconductor equipment supplier with strong global presence and moderate competitive pressure.
- Diversified segments: Semiconductor Systems ($19.9B), Applied Global Services ($6.2B), Display and Adjacent Markets ($885M).
- Operates across advanced semiconductor fabrication technologies with broad service and equipment offerings.
SkyWater Technology, Inc. (SKYT)
- Smaller semiconductor manufacturer with higher beta, facing significant competitive challenges.
- Concentrated on semiconductor manufacturing and engineering services for niche analog and mixed-signal markets.
- Focuses on co-development and manufacturing of silicon-based analog, power discrete, and rad-hard ICs.
AMAT vs SKYT Positioning
AMAT shows a diversified business model with large-scale equipment manufacturing and services, providing broader market exposure. SKYT operates a more concentrated model focused on specialized manufacturing and development services, potentially limiting scale but targeting niche sectors.
Which has the best competitive advantage?
AMAT exhibits a slightly favorable moat by creating value despite declining profitability, indicating a sustainable competitive advantage. SKYT, with a slightly unfavorable moat, is currently shedding value but improving profitability, reflecting a weaker competitive position.
Stock Comparison
The stock price movements of Applied Materials, Inc. (AMAT) and SkyWater Technology, Inc. (SKYT) over the past year reveal strong bullish momentum, with significant appreciation and distinct trading volume dynamics shaping their performance.
Trend Analysis
Applied Materials, Inc. (AMAT) exhibited a bullish trend over the past 12 months with a 64.6% price increase, showing acceleration and high volatility with a standard deviation of 34.62. The stock ranged from a low of 126.95 to a high of 324.53.
SkyWater Technology, Inc. (SKYT) demonstrated a more pronounced bullish trend with a 248.05% gain over the same period, also accelerating but with lower volatility at a 4.46 standard deviation. Its price fluctuated between 6.1 and 33.1.
Comparing both stocks, SKYT delivered the highest market performance with a 248.05% rise versus AMAT’s 64.6%, reflecting stronger overall price appreciation during the past year.
Target Prices
Here is the current target price consensus from reliable analysts for key semiconductor companies.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Applied Materials, Inc. | 400 | 273 | 327.71 |
| SkyWater Technology, Inc. | 25 | 25 | 25 |
Analysts expect Applied Materials’ stock to trade slightly above its current price of 324.57 USD, indicating moderate upside potential. SkyWater Technology’s target consensus is notably below its current price of 33.08 USD, suggesting a possible overvaluation or higher risk.
Analyst Opinions Comparison
This section compares analysts’ ratings and grades for Applied Materials, Inc. and SkyWater Technology, Inc.:
Rating Comparison
Applied Materials, Inc. Rating
- Rating: B+, classified as Very Favorable by analysts.
- Discounted Cash Flow Score: Moderate rating with a score of 3.
- ROE Score: Very Favorable score of 5, indicating high efficiency in generating profit from equity.
- ROA Score: Very Favorable score of 5, showing effective asset utilization.
- Debt To Equity Score: Moderate score of 2, signifying moderate financial risk.
- Overall Score: Moderate overall score of 3.
SkyWater Technology, Inc. Rating
- Rating: B+, also classified as Very Favorable by analysts.
- Discounted Cash Flow Score: Very Unfavorable with the lowest score of 1.
- ROE Score: Very Favorable score of 5, matching AMAT’s strong performance.
- ROA Score: Very Favorable score of 5, equal to AMAT’s rating.
- Debt To Equity Score: Very Unfavorable score of 1, indicating higher financial risk.
- Overall Score: Moderate overall score of 3, same as AMAT.
Which one is the best rated?
Both companies hold the same overall rating of B+ and a moderate overall score of 3. However, AMAT outperforms SKYT in discounted cash flow and debt-to-equity scores, reflecting a more favorable financial risk and valuation profile based on the provided data.
Scores Comparison
Here is a comparison of the financial scores for Applied Materials, Inc. and SkyWater Technology, Inc.:
AMAT Scores
- Altman Z-Score: 13.45, indicating a safe zone with very low bankruptcy risk.
- Piotroski Score: 7, classified as strong financial health.
SKYT Scores
- Altman Z-Score: 2.20, indicating a grey zone with moderate bankruptcy risk.
- Piotroski Score: 5, classified as average financial health.
Which company has the best scores?
Based strictly on the provided data, AMAT shows a significantly higher Altman Z-Score indicating stronger financial stability, and a stronger Piotroski Score compared to SKYT, suggesting better overall financial health.
Grades Comparison
The following is a comparison of the recent grades assigned to Applied Materials, Inc. and SkyWater Technology, Inc.:
Applied Materials, Inc. Grades
This table shows recent grades and actions from notable grading companies for Applied Materials, Inc.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| B of A Securities | Maintain | Buy | 2026-01-13 |
| Susquehanna | Upgrade | Positive | 2026-01-12 |
| Cantor Fitzgerald | Maintain | Overweight | 2026-01-08 |
| B. Riley Securities | Maintain | Buy | 2025-12-18 |
| Mizuho | Maintain | Neutral | 2025-12-17 |
| Wells Fargo | Maintain | Overweight | 2025-12-15 |
| Jefferies | Maintain | Buy | 2025-12-15 |
| Keybanc | Maintain | Overweight | 2025-12-02 |
| UBS | Upgrade | Buy | 2025-11-25 |
| B. Riley Securities | Maintain | Buy | 2025-11-14 |
Overall, Applied Materials has consistently received buy and overweight ratings, with several upgrades, indicating a stable positive outlook.
SkyWater Technology, Inc. Grades
This table shows recent grades and actions from notable grading companies for SkyWater Technology, Inc.:
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Needham | Maintain | Buy | 2025-11-06 |
| Piper Sandler | Maintain | Overweight | 2025-11-06 |
| TD Cowen | Maintain | Buy | 2025-11-06 |
| Needham | Maintain | Buy | 2025-08-07 |
| Needham | Maintain | Buy | 2025-05-08 |
| Needham | Maintain | Buy | 2025-02-27 |
| Needham | Maintain | Buy | 2024-11-11 |
| Piper Sandler | Maintain | Overweight | 2024-10-25 |
| Piper Sandler | Maintain | Overweight | 2024-08-08 |
| Needham | Maintain | Buy | 2024-05-09 |
SkyWater Technology has maintained consistent buy and overweight ratings, with no recent changes or downgrades, reflecting steady analyst confidence.
Which company has the best grades?
Applied Materials has received a larger volume of buy and overweight grades, including recent upgrades, compared to SkyWater Technology’s steady but less frequent buy ratings. This may indicate a stronger analyst consensus potentially contributing to greater investor confidence and perceived stability.
Strengths and Weaknesses
Below is a comparison of Applied Materials, Inc. (AMAT) and SkyWater Technology, Inc. (SKYT) based on key investment criteria using the latest available data.
| Criterion | Applied Materials, Inc. (AMAT) | SkyWater Technology, Inc. (SKYT) |
|---|---|---|
| Diversification | Highly diversified with strong segments: Semiconductor Systems (19.9B), Applied Global Services (6.2B), Display and Adjacent Markets (885M) | Less diversified, mainly focused on Advanced Technology Services and Wafer Services, total revenues under 300M |
| Profitability | Strong profitability: Net margin 24.7%, ROE 34.3%, ROIC 22.0% (favorable) | Negative profitability: Net margin -2.0%, ROE -11.8%, ROIC 3.4% (unfavorable) |
| Innovation | Leading in semiconductor systems with ongoing R&D investments, solid asset turnover and fixed asset turnover (5.54) | Smaller scale innovation, improving ROIC trend but overall profitability still negative |
| Global presence | Extensive global footprint serving semiconductor and display industries worldwide | More limited global reach, niche player in semiconductor manufacturing services |
| Market Share | Large market share in semiconductor equipment industry, revenues at ~28.7B | Small player in specialty semiconductor services, revenues below 300M |
Key takeaways: Applied Materials shows strong diversification, global presence, and excellent profitability, though with a slightly declining ROIC trend. SkyWater is still developing its profitability and scale, with growing ROIC but currently shedding value. For risk-conscious investors seeking stability and leadership, AMAT is the stronger choice, while SKYT may appeal to those seeking early-stage growth potential with higher risk.
Risk Analysis
Below is a comparative table of key risk metrics for Applied Materials, Inc. (AMAT) and SkyWater Technology, Inc. (SKYT) based on the most recent data available:
| Metric | Applied Materials, Inc. (AMAT) | SkyWater Technology, Inc. (SKYT) |
|---|---|---|
| Market Risk | Beta 1.67 (moderate volatility) | Beta 3.49 (high volatility) |
| Debt Level | Debt-to-Equity 0.35 (low) | Debt-to-Equity 1.33 (high) |
| Regulatory Risk | Moderate (global semiconductor regulations) | Moderate to high (aerospace/defense exposure) |
| Operational Risk | Medium (complex manufacturing) | Higher (smaller scale, newer operations) |
| Environmental Risk | Moderate (manufacturing emissions) | Moderate (semiconductor manufacturing) |
| Geopolitical Risk | High (significant exposure to Asia) | Moderate (US-based, but global customers) |
In synthesis, SkyWater faces higher market and financial risks due to its elevated beta, significant debt, and weaker liquidity ratios, making it more vulnerable to market fluctuations and financial distress. Applied Materials, with a strong Altman Z-Score (13.45, safe zone) and better financial health, presents relatively lower risk. However, geopolitical tensions, especially in Asia where AMAT operates extensively, remain a critical risk factor for both companies.
Which Stock to Choose?
Applied Materials, Inc. (AMAT) shows steady income growth with a favorable global income statement and strong profitability metrics including a 34.3% ROE. Its financial ratios are mostly favorable, reflecting solid debt management and liquidity, supported by a B+ rating and a slightly favorable economic moat despite a declining ROIC trend.
SkyWater Technology, Inc. (SKYT) exhibits rapid revenue and net income growth with improving profitability but remains overall unprofitable. Its financial ratios primarily signal weakness, including high leverage and low liquidity, though it holds a B+ rating. The company shows a slightly unfavorable moat, reflecting value destruction but improving ROIC.
For investors focusing on quality and stability, AMAT’s consistent profitability and strong financial health might appear more favorable. Conversely, those with a growth-oriented and risk-tolerant profile could see SKYT’s accelerating income growth and improving profitability as a potential opportunity worth monitoring.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of Applied Materials, Inc. and SkyWater Technology, Inc. to enhance your investment decisions:
