One-glance verdict
Overvalued
$141.63 our estimate vs market $457.12
Wall Street consensus: $640.89 (352.5% higher than our fair-value estimate)
223% above our estimate, beyond the bull case
Fundamentals snapshot
Applied Materials, Inc.
AMAT · NMS · Technology · Semiconductor Equipment & Materials
Current price
$457.12
52-week range
$164.00 - $739.67
Market cap
$362.77B
Balance sheet
Healthy
31.49x Strong cushion
Net cash $1.89B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 8.7% last year.
- Reward Returns 41.1% on equity, ahead of 33% of its peers.
- Reward Free cash flow was positive in 10/10 years.
- Risk Stock trades 107.2% above its 5-year average P/E.
What this company does
Applied Materials, Inc.
Applied Materials builds and sells the specialized, complex machinery that companies need to manufacture computer chips for everything from phones to cars. The company makes most of its money selling this new equipment, but also earns income from servicing and upgrading the machines it has already sold. Because chipmakers can't produce the world's electronics without these tools, Applied Materials is a critical player in the global technology supply chain (the entire network of businesses involved in creating and distributing a product).
How the company got here
Founded in 1967 in the heart of Silicon Valley, Applied Materials started by providing equipment to the budding semiconductor industry. A key turning point came in 1976 when a new CEO, James C. Morgan, refocused the company on its core business of semiconductor manufacturing equipment, leading to significant growth. In the 1980s, the company expanded globally, notably becoming the first U.S. semiconductor equipment maker to open a technology center in Japan. A major innovation in 1987, the Precision 5000, was a machine that combined multiple sensitive processes into one, setting a new industry standard. Through decades of innovation and strategic acquisitions, the company grew into one of the world's largest suppliers for the electronics manufacturing industry.
What it actually does
Think of Applied Materials as a company that sells the super-advanced tools and machinery—the 'picks and shovels'—for the digital gold rush. Instead of making computer chips themselves, they build the complex equipment and software that companies like Intel, Samsung, and TSMC use to manufacture chips. Their machines are used to create virtually every new chip and advanced display in the world, found in everything from smartphones and computers to large-screen TVs. Essentially, they provide the foundational manufacturing technology that makes modern electronics possible.
Semiconductor Systems
This is the company's largest and most important business, making up the vast majority of its sales. It designs and sells the highly sophisticated equipment that performs the critical steps in making a semiconductor chip. These machines carry out incredibly precise tasks like depositing and removing materials in ultra-thin layers, a process that creates the chip's intricate circuitry. Chipmakers pay Applied Materials for these systems to build their manufacturing plants, known as 'fabs'. The demand for these machines is driven by the need for more powerful and efficient chips for things like artificial intelligence (AI) and high-performance computing.
Applied Global Services (AGS)
This part of the business provides services and support for the massive number of machines Applied Materials has already sold and installed around the world. Think of it like the service, maintenance, and spare parts division for all the complex chip-making equipment in factories. This segment generates a steady and predictable stream of revenue (money a company receives from its business activities) by offering maintenance, upgrades, and software to help customers' factories run more efficiently. It's a significant and growing part of the company, providing stability even when equipment sales fluctuate.
What management is betting on now
The company's leadership is heavily focused on the explosive growth of Artificial Intelligence (AI), which requires huge amounts of powerful, energy-efficient computer chips. They are investing billions in research and development (the process of creating new products and technologies) to create the next generation of manufacturing equipment needed for these advanced AI chips. A key part of their strategy is to work very closely with chipmakers to solve manufacturing challenges together, speeding up the time it takes to bring new chip designs to life. Management is also significantly expanding its own manufacturing capacity to be able to double its output of semiconductor equipment by 2028 to meet the surging global demand.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$2.17B
FY2025 Q1
$544.00M
FY2025 Q2
$1.06B
FY2025 Q3
$2.05B
FY2025 Q4
$2.04B
FY2026 Q1
$1.04B
FY2026 Q2
$210.00M
FY2026 Q3
$2.33B
Revenue
$9.12B
Net income
$2.54B
Diluted EPS
3.17
Operating cash flow
$3.04B
Free cash flow
$2.33B
Fetching…
Sources
Revenue
$7.91B
Net income
$2.81B
Diluted EPS
3.51
Operating cash flow
$845.00M
Free cash flow
$210.00M
Fetching…
Sources
Revenue
$7.01B
Net income
$2.03B
Diluted EPS
2.54
Operating cash flow
$1.69B
Free cash flow
$1.04B
Fetching…
Sources
Revenue
$6.80B
Net income
$1.90B
Diluted EPS
2.36
Operating cash flow
$2.83B
Free cash flow
$2.04B
Fetching…
Sources
Revenue
$7.30B
Net income
$1.78B
Diluted EPS
2.22
Operating cash flow
$2.63B
Free cash flow
$2.05B
Fetching…
Sources
Revenue
$7.10B
Net income
$2.14B
Diluted EPS
2.63
Operating cash flow
$1.57B
Free cash flow
$1.06B
Fetching…
Sources
Revenue
$7.17B
Net income
$1.19B
Diluted EPS
1.45
Operating cash flow
$925.00M
Free cash flow
$544.00M
Fetching…
Sources
Revenue
$7.04B
Net income
$1.73B
Diluted EPS
2.09
Operating cash flow
$2.58B
Free cash flow
$2.17B
Fetching…
Sources
Is it cheap or expensive?
Fair value $141.63 vs current price $457.12
Wall Street consensus is the average analyst price target: $640.89 (352.5% higher than our fair-value estimate).
Our most-likely fair value is $141.63 a share — about 69.0% below today's price of $457.12, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Healthy
Net cash $1.9B - more cash than debt. Interest coverage 31.5x.
Net debt
$-1.89B
Interest coverage
31.49x
Applied Materials, Inc.'s profit covers its interest bill about 31.5 times over.
Healthy
Worse cushion
Baseline
Better cushion
AMAT
BASELINE
Applied Materials, Inc.
Total debt $7.35B Interest coverage 31.49x This is the baseline the peer rows are being compared against.
Total debt $4.12B Interest coverage 52.27x +66% vs AMAT Carries about 1.7x more debt cushion than AMAT.
Total debt $2.31B Interest coverage 95.53x +203% vs AMAT Carries about 3.0x more debt cushion than AMAT.
Total debt $6.15B Interest coverage 19.90x -37% vs AMAT Carries about 1.6x less debt cushion than AMAT.
Total debt $0.00 Interest coverage 313.72x +896% vs AMAT Carries about 10.0x more debt cushion than AMAT.
Total debt $100.13M Interest coverage 100.59x +219% vs AMAT Carries about 3.2x more debt cushion than AMAT.
What you should know
The case for and against AMAT
3 Rewards
1 Risk
Rewards
-
Revenue grew 8.7% last year.
-
Returns 41.1% on equity, ahead of 33% of its peers.
-
Free cash flow was positive in 10/10 years.
Risks
-
Stock trades 107.2% above its 5-year average P/E.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
39.48x
Forward P/E
24.77x
P/B
14.16x
P/S
11.76x
EV/EBITDA
36.45x
PEG ratio
0.90x
Profitability
How much profit each dollar creates
Gross margin
49.4%
Operating margin
33.7%
Net margin
30.1%
ROE
41.1%
ROA
15.5%
Health
Liquidity and balance-sheet strength
Debt / equity
0.29x
Current ratio
2.42x
Quick ratio
1.63x
Total debt
$7.35B
Total cash
$9.23B
Growth
How the business has been compounding
Revenue TTM
$30.84B
Revenue 5Y CAGR
5.3%
EPS TTM
11.58
EPS 5Y CAGR
5.2%
Cash flow
How much cash the business throws off
Operating CF TTM
$8.40B
Free CF TTM
$5.70B
FCF margin
18.5%
Dividend
Shareholder payout
Yield
0.4%
Payout ratio
16.5%
Last ex-div date
2026-08-20