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Applied Materials Inc (AMAT) Stock

Applied Materials Inc Stock Details, Movements and Public Alerts

Applied Materials Inc (AMAT): The $165 Billion Pick-and-Shovel Play Powering AI's Chip Revolution

Behind every AI breakthrough, smartphone, and data center lies Applied Materials Inc—the company that makes the machines that make the chips. CEO Gary Dickerson oversees a $27 billion semiconductor equipment empire that sells the picks and shovels of the digital age. While investors obsess over chip designers like NVIDIA and AMD, Applied Materials quietly supplies the $100 million fabrication tools essential to manufacturing cutting-edge semiconductors. With AI driving insatiable demand for advanced chips and government initiatives reshoring fab capacity to the U.S. and Europe, Applied Materials sits at the intersection of technological evolution and geopolitical necessity. The company's Endura, Centura, and Producer systems have become indispensable to chipmakers pursuing Moore's Law beyond what was thought physically possible.

52-Week Range

$237.39 - $123.03

-0.69% from high · +91.62% from low

Avg Daily Volume

9,823,727

20-day average

100-day avg: 7,825,738

Fundamentals

Valuation Metrics

P/E Ratio (TTM)

25.96

Above market average

Forward P/E

22.94

Earnings expected to grow

PEG Ratio

2.25

Potentially overvalued

Price to Book

9.13

EV/EBITDA

18.54

EPS (TTM)

$8.38

Price to Sales

6.06

Beta

1.81

More volatile than market

How is AMAT valued relative to its earnings and growth?
Applied Materials Inc trades at a P/E ratio of 25.96, which is above the market average of approximately 20. This premium valuation suggests investors expect above-average growth or the company has competitive advantages justifying the higher multiple. Looking ahead, the forward P/E of 22.94 is lower than the current P/E, indicating analysts expect earnings to grow over the next year. The PEG ratio of 2.25 indicates a premium valuation even accounting for growth.
What is AMAT's risk profile compared to the market?
With a beta of 1.81, Applied Materials Inc is significantly more volatile than the market. For every 10% market move, this stock tends to move 18% in the same direction. Higher beta stocks offer greater potential returns but with increased risk. The price-to-book ratio of 9.13 shows investors value the company above its book value, which often reflects intangible assets or growth prospects.

Performance & Growth

Profit Margin

23.90%

Operating Margin

30.60%

EBITDA

$9.05B

Return on Equity

35.60%

Return on Assets

15.90%

Revenue Growth (YoY)

7.70%

Earnings Growth (YoY)

8.30%

How profitable and efficient is AMAT's business model?
Applied Materials Inc achieves a profit margin of 23.90%, meaning it retains $23.90 from every $100 in revenue after all expenses. This is an impressive margin, indicating strong pricing power and efficient cost management that allows the company to generate substantial profits. The operating margin of 30.60% reveals how efficiently the company runs its core business operations before interest and taxes. With ROE at 35.60% and ROA at 15.90%, the company generates strong returns on invested capital.
What are AMAT's recent growth trends?
Applied Materials Inc's revenue grew by 7.70% year-over-year, showing steady progress in growing the business. This positive trajectory indicates the company maintains competitive positioning in its markets. Earnings increased by 8.30% year-over-year, outpacing revenue growth through improved margins. These growth metrics should be evaluated against SEMICONDUCTOR EQUIPMENT & MATERIALS industry averages for proper context.

Dividend Information

Dividend Per Share

$1.72

Dividend Yield

0.77%

Ex-Dividend Date

Nov 20, 2025

Dividend Date

Dec 11, 2025

What dividend income can investors expect from AMAT?
Applied Materials Inc offers a dividend yield of 0.77%, paying $1.72 per share annually. This modest yield below 2% suggests the company prioritizes growth investments over current income. While the dividend provides some return, investors are likely attracted more by capital appreciation potential than income generation. To receive the next dividend, shares must be purchased before the ex-dividend date of Nov 20, 2025.
How reliable is AMAT's dividend for long-term investors?
The dividend sustainability can be assessed through the payout ratio - Applied Materials Inc pays $1.72 per share in dividends against earnings of $8.38 per share, resulting in a payout ratio of 20.53%. This conservative payout below 30% indicates excellent dividend safety with substantial room for future increases. The company retains most earnings for growth while still rewarding shareholders. The next dividend payment is scheduled for Dec 11, 2025.

Company Size & Market

Market Cap

$173.3B

Revenue (TTM)

$28.61B

Revenue/Share (TTM)

$35.30

Shares Outstanding

796.64M

Book Value/Share

$24.48

Asset Type

Common Stock

What is AMAT's market capitalization and position?
Applied Materials Inc has a market capitalization of $173.3B, classifying it as a large-cap stock ($10B-$200B). Large-caps are typically industry leaders with established business models, offering a balance of stability and growth potential. They often provide dividend income and are core holdings in institutional portfolios. With 796.64M shares outstanding, the company's ownership is relatively concentrated. As a major player in the SEMICONDUCTOR EQUIPMENT & MATERIALS industry, it competes with other firms in this sector.
How does AMAT's price compare to its book value?
Applied Materials Inc's book value per share is $24.48, while the current stock price is $235.75, resulting in a price-to-book (P/B) ratio of 9.63. This high P/B ratio indicates significant intangible assets, strong brand value, or high growth expectations. Technology and consumer brand companies often trade at elevated P/B ratios due to intellectual property and competitive advantages not reflected on the balance sheet. As a common stock, this represents equity ownership with voting rights.

Analyst Ratings

Analyst Target Price

$201.19

14.66% downside potential

Analyst Recommendations

Strong Buy

3

Buy

20

Hold

14

Sell

0

Strong Sell

0

How reliable are analyst predictions for AMAT?
37 analysts cover AMAT with 62% recommending buy/strong buy ratings. Analyst predictions have mixed reliability - studies show consensus rarely beats market returns consistently. The mixed views reflect uncertainty about the outlook. The consensus target of $201.19 implies -14.7% downside, but targets are often adjusted to follow price moves rather than predict them.
What is the Wall Street consensus on AMAT?
Current analyst recommendations:3 Strong Buy, 20 Buy, 14 Hold, 00The bullish tilt suggests optimism about future prospects, though investors should conduct independent research.Remember that analyst opinions often lag price movements and can be influenced by investment banking relationships.

Fundamentals last updated: Oct 6, 2025, 06:38 PM

Technical Indicators

RSI (14-day)

63.47

Neutral

50-Day Moving Average

$181.01

30.24% above MA-50

200-Day Moving Average

$169.81

38.83% above MA-200

MACD Line

12.27

MACD Signal

10.15

MACD Histogram

2.12

Bullish

What does AMAT's RSI value tell investors?
The RSI (Relative Strength Index) for AMAT is currently 63.47, indicating the stock is showing bullish momentum (60-70 range). The stock has positive momentum without being extremely overbought. This zone often occurs during healthy uptrends where buyers remain in control. Combined with the price being above the 50-day moving average, this confirms bullish conditions.
How should traders interpret AMAT's MACD and moving average crossovers?
MACD analysis shows the MACD line at 12.27 above the signal line at 10.15, with histogram at 2.12. This bullish crossover suggests upward momentum is building. The wide histogram confirms strong momentum. The 50-day MA ($181.01) is above the 200-day MA ($169.81), forming a golden cross pattern that typically signals a long-term uptrend. Price is currently above both MAs, confirming strength.

Indicators last updated: Oct 8, 2025, 12:32 AM

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Applied Materials Inc (AMAT) Stock Analysis 2025: Complete Investment Guide

The Company Making the Machines That Make the Future

In 2015, many analysts questioned whether Applied Materials could maintain relevance as Moore's Law—the principle that chip transistor density doubles every two years—approached physical limits. CEO Gary Dickerson, who joined in 2013, bet the company's future on solving the "impossible" challenges of sub-7nm manufacturing. Nearly a decade later, that gamble has paid off spectacularly: Applied Materials now holds dominant positions in atomic layer deposition (ALD), physical vapor deposition (PVD), and emerging technologies like gate-all-around transistors (GAA) critical to 3nm and smaller nodes.

Dickerson's strategy centers on co-innovation with leading chipmakers—embedding Applied Materials engineers directly at Intel, TSMC, and Samsung fabs to develop next-generation processes years before volume production. This approach has made the company's Endura PVD systems the industry standard for advanced logic, while its Sym3 etch tools enable the 3D structures in cutting-edge memory chips. With AI accelerators requiring 2.5x more manufacturing steps than traditional processors, Applied Materials' equipment intensity per wafer has increased dramatically—translating to higher equipment sales without needing chip volume growth.

Business Model & Competitive Moat

Applied Materials operates through three segments: Semiconductor Systems (60% of revenue—selling capital equipment like deposition, etch, and metrology tools), Applied Global Services (40%—spare parts, upgrades, and maintenance contracts), and Display & Adjacent Markets (5%—equipment for OLED screens). The semiconductor systems business is inherently cyclical, tied to chipmaker capital expenditure cycles, while services provide stable, high-margin recurring revenue buffering downturns.

The company's moat derives from five sources: Technology leadership (decades of process know-how and 15,000+ patents), installed base lock-in (70,000+ systems in the field requiring proprietary parts), switching costs (changing equipment vendors risks months of re-qualification and yield loss), scale advantages (R&D spending of $3.2B annually—30% more than nearest competitors), and customer collaboration (5+ year joint development programs create deep integration). Additionally, the complexity of tools like Applied's Mirra CMP system—which planarizes wafers with nanometer precision—creates barriers that take competitors 5-10 years to replicate.

Financial Performance

Applied Materials has delivered exceptional financial performance even through semiconductor industry volatility:

  • •Revenue Scale: FY2024 revenue of $27 billion—up 150% from 2019 ($18B)
  • •Profitability: 29% gross margins and 30% operating margins among highest in capital equipment
  • •Cash Generation: $9B+ operating cash flow with 35% FCF margins
  • •ROIC Excellence: 40%+ return on invested capital—triple weighted average cost of capital
  • •Balance Sheet: $8B net cash (cash minus debt) provides financial flexibility
  • •Shareholder Returns: $4B+ annual buybacks plus 0.77% dividend yield with 13-year growth streak

What's particularly impressive is revenue mix optimization: services now represent 40% of sales (up from 25% a decade ago), providing stability and driving consolidated gross margins 500+ basis points higher than pure equipment companies. This model mirrors the "razor and blade" strategy—equipment sales seed future parts/service streams with 70%+ gross margins.

Growth Catalysts

  • •AI Chip Complexity: Training and inference accelerators require 2.5-3x more manufacturing steps than traditional processors—Applied's equipment intensity per wafer up 40% for AI chips driving $3B+ incremental revenue
  • •Advanced Packaging Boom: Chiplet architectures and HBM (High Bandwidth Memory) stacking creating entirely new equipment market—Applied's leadership in hybrid bonding systems capturing 80% share of $2B+ TAM growing 60% annually
  • •CHIPS Act Fab Investment: U.S., Europe, Japan investing $400B+ in domestic fabs through 2027—Applied positioned to capture 25-30% as primary supplier to Intel, Samsung, TSMC U.S. projects
  • •Gate-All-Around Transistors: 3nm and smaller nodes transitioning to GAA architecture requiring Applied's differential chemical vapor deposition (CVD) tools—exclusive position in critical process steps
  • •Services Expansion: Installed base of 70,000+ systems growing 5% annually—driving 8-10% services revenue growth with 70%+ incremental margins creating long-term earnings lever
  • •China Replacement Cycle: Despite export restrictions, China represents 30% of equipment market—domestic tool replacement and mature node capacity driving $8B+ annual opportunity

Risks & Challenges

  • •Cyclicality: Semiconductor equipment highly cyclical—revenue can swing ±30% year-over-year with chipmaker capex cycles creating earnings volatility
  • •Customer Concentration: Top 5 customers represent 70%+ of revenue—delays or cancellations from TSMC, Samsung, or Intel materially impact results
  • •China Exposure: 30% of revenue from China subject to geopolitical risk—export restrictions on advanced tools could accelerate (though mature node capacity somewhat insulated)
  • •Competition Intensification: Lam Research (etch), Tokyo Electron (deposition/etch), and ASML (lithography) strong competitors—market share battles in specific segments
  • •Technology Risk: Moore's Law approaching physical limits—potential plateau in leading-edge transitions could reduce equipment intensity and pricing power
  • •Valuation Sensitivity: Stock trades at 26x earnings—vulnerable to multiple compression if growth slows or semiconductor cycle turns negative

Competitive Landscape

The semiconductor equipment industry is an oligopoly dominated by five players controlling 80%+ market share. Applied Materials leads overall with 30% share but faces intense competition in specific categories: ASML (Netherlands) monopolizes advanced lithography with 100% EUV share, Lam Research (U.S.) leads etch tools with 55% market share competing directly with Applied's etch business, Tokyo Electron (Japan) strong in deposition and coaters with 20% overall share, and KLA Corporation (U.S.) dominates inspection/metrology. Applied differentiates through breadth—offering more process steps than competitors enables comprehensive "integrated solutions" approaches.

Applied's competitive advantage shines in new technology adoption: the company typically captures 50-60% share of emerging process equipment markets (gate-all-around, advanced packaging, HBM integration) before competitors catch up. Gary Dickerson's co-development strategy means Applied engineers help define new processes—locking in specifications that favor the company's equipment. This "design-in" advantage is visible in Applied's 60%+ share of critical PVD steps for leading-edge logic, compared to 35-40% overall market share.

Who Is This Stock Suitable For?

Perfect For

  • ✓Long-term investors (5+ years) who can tolerate cyclicality for secular growth
  • ✓Technology thematic investors seeking AI infrastructure exposure beyond chips
  • ✓Growth-at-reasonable-price (GARP) investors—26x forward P/E for 10-15% earnings growth
  • ✓Investors bullish on semiconductor industry and global fab expansion
  • ✓Dividend growth investors—13 consecutive annual increases with 35% payout ratio leaving room

Less Suitable For

  • ✗Conservative income investors—0.77% yield below market and stock volatility high (beta 1.3)
  • ✗Value investors—26x P/E above long-term average of 18-20x during normal cycles
  • ✗Short-term traders—earnings highly volatile with quarterly swings of 20-30% common
  • ✗Risk-averse investors—China exposure (30% revenue) and cyclicality create significant downside risk
  • ✗Investors bearish on chip capex—equipment spending highly correlated to chipmaker profitability

Investment Thesis

Applied Materials represents the quintessential "picks and shovels" play on the semiconductor industry's secular growth. While chip companies battle intense competition and margin pressure, Applied Materials supplies essential equipment with limited alternatives and pricing power derived from technological leadership. The company's exposure to AI—through both advanced logic and HBM/packaging equipment—provides 15-20% growth tailwinds independent of overall chip unit growth. Gary Dickerson's strategic repositioning toward services (now 40% of revenue) has stabilized earnings and expanded margins, creating a more resilient business model than historical equipment peers.

At 26x forward earnings and EV/EBITDA of 16x, valuation appears reasonable given the company's dominant market position, recurring revenue stream, and positioning for multi-year fab buildout driven by reshoring and AI. The 0.77% dividend yield won't attract income investors, but the 13-year growth streak and 35% payout ratio provide confidence in sustainability while leaving room for continued buybacks ($4B+ annually). For investors with 5+ year horizons willing to endure cyclical volatility, Applied Materials offers attractive risk-adjusted returns as semiconductor manufacturing becomes increasingly complex and capital-intensive.

Conclusion

Conclusion

BUY for long-term investors. Applied Materials combines technology leadership, market dominance, and exposure to secular tailwinds (AI, reshoring, advanced packaging) that justify premium valuation. The stock isn't cheap at 26x earnings, but paying fair value for a high-quality business positioned at the center of semiconductor manufacturing innovation makes strategic sense. Best approach: Build position gradually during semiconductor cycle weakness (equipment orders declining 10-15%) when valuation compresses to 18-20x earnings. Current levels offer reasonable entry for 5+ year holders, with conviction purchases on any pullback below $150. The picks-and-shovels model provides better risk-adjusted returns than investing directly in chip companies navigating intense competition and margin pressure.
Bull Case
$230 (35% upside if AI chip complexity drives sustained equipment intensity gains and services reach 45% mix)
Base Case
$190 (12% upside with steady 8-10% revenue growth, margin stability, and valuation at 24x earnings)
Bear Case
$120 (29% downside if semiconductor capex cycle turns down sharply or China restrictions escalate)

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