Start here if you're new
what it is
Applied Materials sells the machines and services chipmakers use to build semiconductors and displays.
how it gets paid
Last year Applied Materials made $28.4B in revenue. Semiconductor Systems was the main engine at $20.7B, or 73% of sales.
why it's growing
Revenue grew 4.4% last year. Revenues advanced 4.4% compared to fiscal 2024, to a company high of $28.4 billion, as demand for artificialintelligence -enabling technology continues to ramp up.
what just happened
Applied beat the quarter with $2.54 EPS on $7.0B revenue, versus $2.20 expected.
At a glance
A balance sheet — strong enough to weather a downturn
75/100 earnings predictability — reasonably predictable
28.5x trailing p/e — priced about right
0.7% dividend yield — cash in your pocket every quarter
34.0% return on capital — every dollar works hard here
xvary composite: 82/100 — above average
What they do
Applied Materials sells the machines and services chipmakers use to build semiconductors and displays.
Applied wins because about 73% of FY25 revenue came from Semiconductor Systems, the big machines chipmakers must buy before they can sell chips. About 23% came from Applied Global Services (repeat work from machines already in factories), and about 4% is Corporate and Other in the table—do not imply the mix sums to 100% with only two lines. Once your customer has a factory built around your gear, replacing it costs time and money.
How they make money
$28.4B
annual revenue · their business grew +4.4% last year
Semiconductor Systems
$20.7B
+4.4%
Applied Global Services
$6.5B
+4.4%
Corporate and Other
$1.1B
0.0%
The products that matter
chipmaking equipment systems
Semiconductor Systems
$20.7B · 73% of revenue
This is the center of gravity. $20.7B of the company's $28.4B revenue comes from the tools customers buy before they can produce chips at scale.
73% of revenue
services and support for installed tools
Applied Global Services
$6.5B · 23% of revenue
This segment is smaller than systems sales, but it is the stabilizer. Service revenue depends on the installed base already in fabs, not just the next big equipment order.
installed-base support
display and adjacent businesses
Corporate and Other
$1.1B · 4% of revenue
At $1.1B, this segment is too small to move the stock on its own. Useful to have. Not the reason you own AMAT.
small contribution
Key numbers
$28.4B
annual sales
That is the size of the machine. A 5% swing is about $1.4B, so small changes matter.
33.0%
operating margin (FY · co.)
For every $1 of sales, $0.33 stayed after operating costs. That is wide for factory gear.
34.0%
return on capital
Every $1 kept in the business has been earning about $0.34 of operating profit. That is why the market pays up.
28.5x
trailing p/e
You are paying 28.5 years of last year's earnings for one share. That leaves less room for mistakes.
Financial health
A
strength
- balance sheet grade A — very strong financial position
- risk rank 3 — safer than 50% of stocks
- price stability 30 / 100
- long-term debt $6.5B (3% of capital)
- net profit margin 27.9% — keeps 28 cents of every dollar in revenue
- return on equity 43% — $0.43 profit for every $1 investors have put in
A with balance sheet grade and net profit margin standing out. your money faces less risk here than at most public companies.
Total return vs. market
You invested $10,000 in AMAT 3 years ago → it's now worth $25,370.
The index would have given you $13,920.
source: institutional data · total return
What just happened
beat estimates
Applied beat the quarter with $2.54 EPS on $7.0B revenue, versus $2.20 expected.
Revenue fell 2% vs. prior year, but EPS jumped 75% and gross margin held at 49.0%. That is the whole trick: less growth, more profit.
$7.0B
revenue (Q)
$2.54
eps (Q)
49.0%
gross margin (Q)
eps beat
The $2.54 EPS number mattered most because it beat $2.20 expected by about 15%.
-
applied materials generated record results for fiscal 2025 (ended october 26th).
-
revenues advanced 4.4% compared to fiscal 2024, to a company high of $28.4 billion, as demand for artificialintelligence (ai)-enabling technology continues to ramp up.
-
also, an improved mix of advanced systems sales and price increases helped drive a 9% vs. prior year gain in earnings per share, to $9.42.
-
however, there was some deceleration evidenced in the fiscal fourth quarter.tighter trade restrictions and overcapacity in china weighed on vs. prior year and sequential top- and bottom-line comparisons.
-
nonetheless, applied materials appears poised to pick up steam in the quarters ahead.
source: company earnings report, 2026
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What could go wrong
Applied Materials has a very specific problem, not a vague one: China restrictions threaten $2.8B–$4.3B of revenue, and 73% of company sales still come from the tool business that feels those shocks first.
med
china export controls
Current restrictions threaten $2.8B–$4.3B of revenue. If rules tighten again, the hit lands first on Semiconductor Systems, the segment that already drives 73% of company revenue.
That is the difference between a background policy story and a real earnings story. AMAT is living in the second category.
med
semiconductor capex cycle
Foundry and memory spending moves in waves. When customers pause fab builds, equipment orders slow before the income statement fully shows it.
With $20.7B tied to Semiconductor Systems, AMAT still behaves like a tool supplier first and a steadier services business second.
med
services are a cushion, not a shield
Applied Global Services is a real buffer at $6.5B, but it is still much smaller than the core systems business. The installed base helps. It does not fully de-cycle the model.
If new tool demand softens for more than a quarter or two, 23% service revenue cannot fully offset 73% equipment exposure.
Between the $2.8B–$4.3B China exposure and a revenue mix still dominated by tool sales, this is a premium cyclical stock. If you own it, that distinction matters.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
services mix above 23%
If Applied Global Services starts taking a bigger share of revenue than today's 23%, the model gets less cyclical. That is one of the few clean ways this story improves.
risk
china rules, not just china demand
Restrictions already threaten $2.8B–$4.3B of sales. Policy is now part of the earnings model whether investors like it or not.
trend
quarterly revenue after the 2% dip
Here is the next question: was the latest decline a pause, or the start of a longer air pocket in customer spending.
calendar
margin discipline
Quarterly margin was 24.7%. If margins hold while revenue wobbles, management is still doing the hard part right.
Analyst rankings
short-term outlook
top 5%
Momentum score 1 is the highest rating. In human-speak, analysts think AMAT has better near-term odds than almost everything else they cover.
risk profile
average
Stability score 3 means middle-of-the-road risk. Not especially safe. Not unusually dangerous.
chart momentum
average
Technical score 3 says the chart is behaving normally. No panic signal. No breakout signal either.
earnings predictability
75 / 100
Reasonably consistent, but this is still semiconductor equipment. The cycle gets a vote.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 1,053 buyers vs. 1,039 sellers in 3q2025. total institutional holdings: 0.6B shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$119
$357
$268
current price
$238
target midpoint · 11% from current · 3-5yr high: $285 (+5% · 2% ann'l return)
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