GROWTH
Top line stable.
+4.4% YoY versus +2.5% prior. 3y CAGR +3.2%.
+4.4%
Applied Materials, Inc. AMAT
Technology · Market Cap: $450.4B
Live price unavailable
Fundamentals as of 2026-04-26
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Technology · Market Cap: $450.4B
Live price unavailable
Fundamentals as of 2026-04-26
All analysis on this page is for educational purposes only and does not constitute financial advice. Fair values are model-based estimates. Always do your own research.
The Question
Yes — Applied Materials, Inc.'s 35.6% ROE ranks above the S&P 500 median, and D/E 0.69 stays within healthy bounds.
Financial story
Yes — Applied Materials, Inc.'s 35.6% ROE shows strong capital efficiency, and its 0.69 debt-to-equity stays within healthy bounds.
Bottom line: AMAT currently has no legendary investor models qualifying — see /stock/AMAT/valuation for the per-model breakdown, but earns a C sector grade (55/100) in Technology. Use the per-tab analysis to form your own view. Drill into the valuation breakdown and sector ranking for the full picture.
+4.4% YoY versus +2.5% prior. 3y CAGR +3.2%.
+4.4%Net margin 24.7% versus 26.4% prior (−1.7pp). Operating 29.2%.
24.7%P/E 42.6x — 109% above the 5y median of 20.3x. Forward 37.0x hints at EPS expansion next year.
42.6xStrength. Record revenue of $7.91 billion, a dividend raised 15%, and an order book management calls the clearest in its history — the machines that print AI chips are running flat out, and Applied Materials guides its equipment business to grow more than 30% this year. What the price leaves unresolved is whether a cycle running this hot has simply stopped being a cycle.
Risk. Strip out a $673 million paper gain on a stock holding and the record $3.51 in quarterly earnings becomes $2.86 — the operating engine grew about 20%, not the 33% the headline implies. Yet near $567 the stock trades at roughly 53× earnings, two to three times its decade norm, leaving little cushion if the cycle that lifted both the profit and the multiple ever turns.
Because the market now prices it as a long-term AI winner rather than a cyclical. As of June 19, 2026 the stock sits near $567, about 53 times trailing earnings — more than double its ten-year average near 20 times. The re-rating tracks an industry-wide view that AI data-center build-outs will drive wafer-equipment spending for years: Applied guides its equipment business to grow more than 30% in calendar 2026, led by leading-edge logic, DRAM and advanced packaging.
Not entirely — the headline overstates the operating result. Reported GAAP earnings were a record $3.51 per share, up 33% year over year, but the company's own adjusted figure was $2.86, up about 20%. The roughly $0.65 gap is almost entirely a $673 million unrealized gain on its ~9% stake in BE Semiconductor (Besi), marked to market and booked below the operating line. That paper gain lifted net income about $283 million above operating income, so the operating engine grew near 20%, not the 33% the headline implies.
Near $567, Applied Materials trades at roughly 53 times trailing earnings. Over the past decade the same business averaged closer to 20 times and rarely topped 30, so today's multiple is two to three times its historical norm. Peers re-rated alongside it: Lam Research sits near 52 times forward earnings, KLA near 54 and ASML near 49. Applied actually carries the lowest forward multiple of the group, which can read as relative value or as a whole cohort priced for perfection.
China is about 24% of Applied's core Semiconductor Systems plus Services revenue, down from roughly 28% a year earlier as U.S. export rules narrowed the market. In February 2026 the company agreed to pay a $252.5 million penalty to U.S. regulators over tools shipped toward a Chinese chipmaker between 2020 and 2022. That specific case is settled, but the export-control regime that produced it remains, and tighter rules would shrink the addressable market further.
| Firm | Target | Rating | Recent move | Date |
|---|---|---|---|---|
Citi Atif Malik | $710 | Buy | raised 550→710 | Jun 17 |
CF Cantor Fitzgerald C.J. Muse | $650 | Overweight | raised 575→650 | Jun 10 |
Barclays Tom O'Malley | $590 | Overweight | raised 500→590 | Jun 11 |
UBS UBS Timothy Arcuri | $570 | Buy | raised 515→570 | Jun 10 |
Mizuho Vijay Rakesh | $540 | Outperform | raised 500→540 | May 27 |
EI Evercore ISI Mark Lipacis | $515 | Outperform | maintained | Jun 4 |
MS Morgan Stanley | $502 | Equal-Weight | downgraded Overweight→Equal-Weight | May 18 |
AR Argus James Kelleher | $500 | Buy | raised 420→500 | May 19 |
How does AMAT compare?
Across about 40 analysts the average target is roughly $525 — which, notably, sits below the recent share price, meaning the stock has run past the consensus estimate of fair value. The range is wide: the most bullish view, Citi's, is $710, while the low end is near $358. Recent moves skew higher — Cantor Fitzgerald lifted its target to $650 and Barclays to $590 — though Morgan Stanley moved to a neutral stance at $502, a measure of how much disagreement the price now carries.
For fiscal Q3 2026 the company guided revenue to about $8.95 billion, plus or minus $500 million — a step up of roughly 13% from the record $7.91 billion just reported — and adjusted earnings of about $3.36 per share, plus or minus $0.20. Management framed it as one quarter of a multi-year build, expecting its semiconductor-equipment business to grow more than 30% in calendar 2026, with leading-edge logic, DRAM and advanced packaging accounting for over 80% of that growth.
See exactly where AMAT ranks
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Sign in to see the rankingAMAT sits at #52 in Technology with a C grade (55/100).
Structural-shift event, not a quarterly print. The marginal-dollar analysis: $650B incremental 2026 hyperscaler capex MUST land somewhere in the semiconductor supply chain — semis don't produce demand exogenously, they are derivative-demand from compute spend. WSTS projects industry revenue at ~$975B (+26% YoY), Bank of America's Vivek Arya models closer to 30%, which would cross the $1T threshold for the first time in history. Both estimates are anchored on SEC-filed capex commitments, not analyst speculation.
The smoking gun is the pace of upward revision — among the fastest in semiconductor-cycle history. Consensus 2026 hyperscaler capex moved from ~$465B at the start of Q3 2025 earnings season to ~$527B by the end of the calls, then pushed toward $650B within weeks. Microsoft, Alphabet, Amazon, and Meta account for roughly 80% of incremental dollar flow. What makes 2026 different is composition: the marginal dollar is shifting from pure merchant GPUs toward custom silicon (Google TPU, Meta MTIA), high-bandwidth memory (HBM3E sold out through 2026), and advanced packaging capacity. This composition shift rewires who captures the margin.
Forward implication: the picks-and-shovels trade has rotated one tier downstream from accelerators to memory and wafer-fab equipment. Memory is the sleeper trade — HBM3E pricing power has returned to the memory oligopoly for the first time since 2018 cycle peak, with MU contract pricing locked in well in advance. The equipment trio (AMAT, LRCX, KLAC) sits at ~28x forward earnings with backlogs extending into 2027 and less single-customer concentration than accelerator vendors. Power is now the binding constraint, not chip supply — interconnection queue times in several US grid regions exceed four years, and transformer lead times have blown out from months to years. This makes LIN (industrial gas), nuclear utilities, and grid infrastructure unconventional AI trades.
Counter-narrative: the Chanos circular-revenue critique — OpenAI raises money, spends it on MSFT Azure compute, MSFT justifies larger NVDA orders, NVDA invests back into OpenAI — resembles late-1990s telecom vendor financing. The counter: today's hyperscalers collectively produce hundreds of billions in operating cash flow annually; they can fund capex out of internally generated cash without stretching the balance sheet. The real Q2-Q3 risk is forward, not backward: the first hyperscaler to cut 2027 capex growth guidance by even 10% on a call would reprice the entire semiconductor complex overnight. That's the scenario every long-only semi fund manager is quietly stress-testing — but it hasn't happened, and the Q1 + confirmed 2026 capex commitments captured by this news event remain unambiguously bullish.
