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Applied Materials (AMAT)
NASDAQ:AMAT
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Applied Materials
(NASDAQ:AMAT)
82Outperform
Positive Factors
Capital Allocation
Applied Materials announced a $10 billion share repurchase program, indicating strong capital allocation and shareholder value enhancement.
Dividend Increase
Applied Materials approved a 15% increase to its quarterly dividend, marking the 8th consecutive year of dividend increase.
Market Share Growth
Applied Materials is expected to capture more than 50% of the Serviceable Available Market share in leading-edge foundry and logic sectors, driven by innovations like gate-all-around and backside power.
Negative Factors
Earnings Expectations
The expected sales and earnings per share for the upcoming quarter are anticipated to be below market expectations due to end-market mix.
Export Control Concerns
Investors worry about further export control restrictions on China exposure, which could impact Applied Materials' sales.
Revenue Impact
The expiration of certain services contracts in China could pose a slight headwind, affecting the Applied Global Services segment's future revenue.
Applied Materials (AMAT) vs. S&P 500 (SPY)
Market Cap
$141.48B
Dividend Yield0.92%
Average Volume (3M)8.65M
Price to Earnings (P/E)22.8
Beta (1Y)1.79
Revenue Growth4.45%
EPS Growth-10.01%
CountryUS
Employees36,000
SectorTechnology
Sector Strength82
IndustrySemiconductors
Share Statistics
EPS (TTM)2.39
Shares Outstanding812,440,860
10 Day Avg. Volume6,233,967
30 Day Avg. Volume8,648,864
Financial Highlights & Ratios
PEG Ratio-1.78
Price to Book (P/B)6.80
Price to Sales (P/S)0.00
P/FCF Ratio21.30
Enterprise Value/Market Cap0.90
Enterprise Value/Revenue1.17
Enterprise Value/Gross Profit9.61
Enterprise Value/Ebitda3.83
Forecast
1Y Price Target
$197.16Price Target Upside12.82% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering21
Applied Materials Business Overview & Revenue Model
Company DescriptionApplied Materials, Inc. is a global leader in providing materials engineering solutions used to produce virtually every new chip and advanced display in the world. The company operates primarily in the semiconductor, display, and related industries. Its core products and services include equipment, services, and software used in the fabrication of semiconductor chips and flat panel displays, as well as in the manufacturing of solar photovoltaic products.
How the Company Makes MoneyApplied Materials generates revenue primarily through the sale of manufacturing equipment to semiconductor and display industries. The company's revenue model revolves around several key streams: sales of semiconductor systems, which include equipment used in the fabrication of integrated circuits; sales of display and adjacent market equipment, which involve tools used in the production of flat panel displays and other related applications; and services, which include maintenance, upgrades, and other support services for their installed base of equipment. Significant factors contributing to its earnings include ongoing technological advancements in semiconductor manufacturing, strategic partnerships with leading semiconductor and electronics manufacturers, and a focus on research and development to maintain its competitive edge in the market.
Applied Materials Key Performance Indicators (KPIs)
Any
Semiconductor Systems Revenue Breakdown
Breaks down revenue from semiconductor systems, offering insight into demand trends, technological leadership, and competitive positioning in the semiconductor market.
Breaks down revenue from semiconductor systems, offering insight into demand trends, technological leadership, and competitive positioning in the semiconductor market.
Data provided by:
Main Street Data
Main Street DataApplied Materials Financial Statement Overview
Summary
Applied Materials demonstrates strong financial health with consistent revenue growth, robust profit margins, and a solid balance sheet. Despite minor declines in free cash flow, the company's cash position supports strategic investments and debt management effectively.Income Statement
Applied Materials shows strong financial performance with consistent revenue growth from $25.785 billion in 2022 to $27.635 billion TTM, indicating a robust demand for its products. The gross profit margin is solid at 47.7% TTM with a commendable net profit margin of 22.9%, highlighting effective cost management and profitability. EBIT and EBITDA margins are healthy at 29.2% and 30.3% respectively, demonstrating operational efficiency.89
Very Positive
Balance Sheet
The balance sheet is robust, with a debt-to-equity ratio of 0.34 indicating a conservative leverage strategy. Return on equity is strong at 34.1%, showcasing effective use of equity capital. The equity ratio is 55.9%, reflecting a stable financial structure with a solid equity base.85
Very Positive
Cash Flow
Cash flow metrics reveal a stable financial position with a free cash flow of $5.935 billion TTM, although there is a slight decrease from the previous year. Operating cash flow to net income ratio is 1.15, demonstrating strong cash generation relative to net income. Free cash flow to net income ratio is 0.93, indicating efficient cash utilization despite a decrease in free cash flow growth.80
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 27.64B | 27.18B | 26.52B | 25.79B | 23.06B | 17.20B | Gross Profit |
| 13.19B | 12.90B | 12.38B | 11.99B | 10.91B | 7.69B | EBIT |
| 8.07B | 7.87B | 7.65B | 7.79B | 6.89B | 4.37B | EBITDA |
| 8.49B | 8.26B | 8.17B | 8.23B | 7.59B | 4.84B | Net Income Common Stockholders |
| 6.34B | 7.18B | 6.86B | 6.53B | 5.89B | 3.62B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 8.21B | 9.47B | 6.87B | 2.58B | 5.46B | 5.74B | Total Assets |
| 33.34B | 34.41B | 30.73B | 26.73B | 25.82B | 22.35B | Total Debt |
| 6.59B | 6.26B | 6.00B | 5.54B | 5.45B | 5.45B | Net Debt |
| 324.00M | -1.76B | -133.00M | 3.55B | 457.00M | 97.00M | Total Liabilities |
| 14.71B | 15.41B | 14.38B | 14.53B | 13.58B | 11.78B | Stockholders Equity |
| 18.63B | 19.00B | 16.35B | 12.19B | 12.25B | 10.58B |
| Cash Flow | Free Cash Flow | ||||
| 5.93B | 7.49B | 7.59B | 4.61B | 4.77B | 3.38B | Operating Cash Flow |
| 7.28B | 8.68B | 8.70B | 5.40B | 5.44B | 3.80B | Investing Cash Flow |
| -2.78B | -2.33B | -1.53B | -1.36B | -1.22B | -130.00M | Financing Cash Flow |
| -5.10B | -4.47B | -3.03B | -7.04B | -4.59B | -1.34B |
Applied Materials Technical Analysis
Positive
174.75
Price Trends
149.63
Positive
161.50
Positive
174.32
Positive
Market Momentum
6.44
Negative
72.36
Negative
94.71
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AMAT, the sentiment is Positive. The current price of 174.75 is above the 20-day moving average (MA) of 153.84, above the 50-day MA of 149.63, and above the 200-day MA of 174.32, indicating a bullish trend. The MACD of 6.44 indicates Negative momentum. The RSI at 72.36 is Negative, neither overbought nor oversold. The STOCH value of 94.71 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AMAT.
Applied Materials Risk Analysis
Applied Materials disclosed 24 risk factors in its most recent earnings report. Applied Materials reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Applied Materials Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $141.48B | 22.78 | 35.19% | 0.92% | 4.45% | -10.01% | |
79 Outperform | $106.53B | 22.91 | 10.10% | 0.48% | 71.05% | ― | |
78 Outperform | $108.69B | 23.67 | 53.14% | 1.05% | 20.33% | 31.89% | |
74 Outperform | $106.45B | 29.26 | 104.10% | 0.78% | 20.44% | 44.14% | |
71 Outperform | $112.50B | 72.33 | 4.43% | 1.65% | -19.28% | -44.00% | |
60 Neutral | $11.64B | 10.63 | -6.94% | 2.93% | 7.63% | -11.15% | |
48 Neutral | $93.87B | ― | -18.66% | 2.32% | -3.97% | -562.40% |
* Technology Sector Average
Performance Comparison
AMAT
Applied Materials
174.75
-35.56
-16.91%
ADI
Analog Devices
227.12
16.54
7.85%
INTC
Intel
21.55
-10.08
-31.87%
KLAC
KLA
806.00
63.43
8.54%
LRCX
Lam Research
84.79
-5.42
-6.01%
MU
Micron
95.45
-29.27
-23.47%
Applied Materials Earnings Call Summary
Earnings Call Date:May 15, 2025
(Q2-2025)
| % Change Since: 0.00%|
Next Earnings Date:Aug 14, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong financial performance with record earnings per share and robust revenue growth across segments. However, challenges persist in the China market and trade restrictions are impacting service business growth. Despite these challenges, the company shows strong potential in advanced DRAM and service revenues.Q2-2025 Updates
Positive Updates
Record Earnings Per Share
Applied Materials delivered record earnings per share in Q2 2025, with a 14% year-over-year increase to $2.39.
Revenue Growth
Total net revenue reached approximately $7.1 billion, up 7% year-over-year, with growth across all business segments.
Strong Gross Margin
Non-GAAP gross margin was 49.2%, up 170 basis points year-over-year, marking the highest quarterly gross margin since fiscal year 2000.
Advanced DRAM Customer Growth
Revenues from advanced DRAM customers are expected to grow more than 40% in 2025 due to investments in DDR-5 and high-bandwidth memory.
Service Revenue Growth
Core parts and services revenues grew in the low double-digit range last year, and a similar growth rate is expected in 2025.
Increased Shareholder Capital Distributions
Approximately $2 billion was distributed in dividends and share repurchases during Q2, with a 15% increase to the dividend per share.
Negative Updates
China Market Challenges
Lower spending in China is expected with investments in both DRAM and mature logic down for the year, affected by trade restrictions.
200-millimeter Equipment Sales Decline
Applied Global Services saw a decline in sales of 200-millimeter equipment, impacting overall AGS revenue growth.
Trade Restrictions Impact
Trade restrictions impacted service business growth, particularly in China, affecting the overall growth rate of Applied Global Services.
Company Guidance
During the Applied Materials Second Quarter Fiscal 2025 Earnings Conference Call, the company provided robust guidance with an optimistic outlook on several metrics. They reported a record earnings per share and a 7% year-to-date revenue increase. For the third quarter, they anticipate total revenue of $7.2 billion, plus or minus $500 million, representing a 6% year-over-year increase. The company expects non-GAAP EPS to be $2.35, plus or minus $0.20, indicating an 11% increase year-over-year. In terms of segment performance, Semiconductor Systems revenue is projected to be approximately $5.4 billion, up 10% year-over-year, while Applied Global Services (AGS) revenue is forecasted at $1.55 billion, slightly down 2% year-over-year. Display revenue is expected to remain stable at around $250 million. Despite challenges in China and trade restrictions, the company maintains a positive growth trajectory, supported by advancements in AI-driven technologies and strategic co-innovation initiatives.Applied Materials Corporate Events
Private Placements and FinancingBusiness Operations and Strategy
Applied Materials Secures New $2 Billion Credit Facility
Positive
Feb 27, 2025
On February 24, 2025, Applied Materials, Inc. entered into a new five-year $2.0 billion revolving credit facility with Bank of America, replacing a previous $1.5 billion agreement set to expire in 2026. This strategic financial move enhances Applied’s credit capacity, potentially strengthening its operational flexibility and market position.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.