AMAT Semiconductor Equipment & Materials
Applied Materials, Inc.
Applied Materials makes the wafer fabrication equipment chipmakers use to deposit, etch, shape, inspect, and package the materials inside semiconductors, and services the large installed base of that equipment. FY2025 (ended October 26, 2025) revenue was $28.4 billion, but sales are concentrated: two customers made up 19% and 15% of revenue, and China was 30% (down from 37%) as U.S. export controls tightened. In February 2026 Applied paid $252.5 million to settle a Commerce Department export-controls inquiry over certain China shipments.
Last updated
Analysis last edited: October 4, 2026 · Financial data fetched: October 4, 2026 14:31 (SEC EDGAR) · Source 10-K filed: December 12, 2025
Next update expectedAfter FY2026’s 10-K is filed (roughly 60–90 days after fiscal year end (sooner for larger filers)), financials and analysis will be refreshed.
01
Company profile
- Legal name
- APPLIED MATERIALS INC /DE
- Headquarters
- SANTA CLARA, CA
- Incorporated in
- Delaware
- Fiscal year end
- 10/26
- Exchange & ticker
- NASDAQ: AMAT
- Industry
- Semiconductor Equipment & Materials
- CIK
- 6951
Workforce (as of FY2025 year-end)
Employees
36,500
Source: Form 10-K (FY2025) cover page and business description
02
Earnings calendar
When the company reports each quarter: the quarter-end date, the day results were released, and when the 10-Q or 10-K was filed.
Next report
Q4 FY2026
Quarter end: October 2026. In past years, Q4 results were released 18 days after quarter end (Nov 13, 2025; Nov 14, 2024; Nov 16, 2023). No date has been announced in the sources this site uses.
Reporting pattern
- Fiscal year ends around October 26.
- Reports four times a year: three quarterly reports (10-Q) and an annual report (10-K) for Q4.
- Earnings releases came 18 days after quarter end over the last 12 quarters.
| Quarter | Quarter ended | Earnings release (8-K) | Report filed (10-Q / 10-K) |
|---|---|---|---|
| Q3 FY2026 | Jul 26, 2026 | Aug 13, 2026 (+18 days) | Aug 20, 2026 10-Q (+25 days) |
| Q2 FY2026 | Apr 26, 2026 | May 14, 2026 (+18 days) | May 21, 2026 10-Q (+25 days) |
| Q1 FY2026 | Jan 25, 2026 | Feb 12, 2026 (+18 days) | Feb 19, 2026 10-Q (+25 days) |
| Q4 FY2025 | Oct 26, 2025 | Nov 13, 2025 (+18 days) | Dec 12, 2025 10-K (+47 days) |
| Q3 FY2025 | Jul 27, 2025 | Aug 14, 2025 (+18 days) | Aug 21, 2025 10-Q (+25 days) |
| Q2 FY2025 | Apr 27, 2025 | May 15, 2025 (+18 days) | May 22, 2025 10-Q (+25 days) |
| Q1 FY2025 | Jan 26, 2025 | Feb 13, 2025 (+18 days) | Feb 20, 2025 10-Q (+25 days) |
| Q4 FY2024 | Oct 27, 2024 | Nov 14, 2024 (+18 days) | Dec 13, 2024 10-K (+47 days) |
| Q3 FY2024 | Jul 28, 2024 | Aug 15, 2024 (+18 days) | Aug 22, 2024 10-Q (+25 days) |
| Q2 FY2024 | Apr 28, 2024 | — | May 23, 2024 10-Q (+25 days) |
| Q1 FY2024 | Jan 28, 2024 | Feb 15, 2024 (+18 days) | Feb 27, 2024 10-Q (+30 days) |
| Q4 FY2023 | Oct 29, 2023 | Nov 16, 2023 (+18 days) | Dec 15, 2023 10-K (+47 days) |
Source: SEC EDGAR filing history. Release dates are the dates the earnings release was furnished to the SEC on Form 8-K (Item 2.02), which is normally the day results are announced. Fiscal years are labeled by the calendar year in which they end.
03
Flagship products & services
Semiconductor Systems
Deposition and etch
Examples: Patterning, transistor and interconnect fabrication
Materials engineering for advanced chips.
Semiconductor Systems
Process control
Examples: Optical and eBeam inspection and review, metrology
Helps customers improve yields.
Semiconductor Systems
Advanced packaging
Examples: Heterogeneous integration
Connecting multiple chips together.
AGS
Services and spares
Examples: Service agreements, spare parts, factory automation software
For the installed base of Applied equipment.
Descriptions are from the FY2025 Form 10-K's Item 1.
04
Recent strategic focus
FY2025 developments from the 10-K, and later events from 8-Ks.
Export-controls settlement
On February 11, 2026, Applied agreed to pay $252.5M to the Commerce Department's BIS and to audit its export compliance program; the DOJ and SEC closed their inquiries without enforcement action.
Source: 8-K filed 2026-02-12
Workforce reduction
In October 2025 Applied approved cutting about 4% of its global workforce, with charges of about $160–180M.
Source: 8-K filed 2025-10-23
Shift away from China
FY2025 revenue from China fell 16% while Taiwan rose 71% and Korea 25%.
Source: Form 10-K (FY2025) MD&A
Capex ÷ D&A (FY2025)
5.20x
Well above depreciation — expansion-stage investment
formulacapital expenditures ÷ depreciation & amortization
e.g.$2,260M ÷ $435M = 5.20x
termsCapital expenditures (capex) · Depreciation & amortization (D&A)
R&D-to-revenue ratio (FY2025)
12.6%
formularesearch & development expense ÷ revenue × 100
e.g.$3,570M ÷ $28,368M × 100 = 12.6%
M&A spend (5-year total)
$507M
Latest year: $29M
Cash-flow-statement spending on acquisitions, net of cash acquired
Where the money goes, over time
Unit: $M. Capex went from $668M in FY2021 to $2.26B in FY2025
- Capex
- R&D
- M&A spend
formulacapital expenditures ÷ depreciation & amortization
termsCapital expenditures (capex) · Depreciation & amortization (D&A)
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2025-12-12
05
Key figures at a glance
FY2021–FY2025, 5 years.
Revenue (FY2025)
$28.37B
As reported in the 10-K
Revenue CAGR (4 years)
+5.3%▲favorable
formula(last-period revenue ÷ first-period revenue) ^ (1 ÷ years) − 1
e.g.($28,368M ÷ $23,063M) ^ (1÷4) − 1 = 5.3%
termsCAGR · ^ (exponent) · Revenue (net sales)
Operating margin (FY2025)
29.2%
-0.7pt vs. 4 years ago
formulaoperating income ÷ revenue × 100
e.g.$8,289M ÷ $28,368M × 100 = 29.2%
ROE (FY2025)
35.5%▲favorable
5-year average: 45.1%
As reported in the 10-K
P/B (FY2025 end)
8.88x
formulaP/E × EPS ÷ BVPS (= period-end share price ÷ book value per share)
e.g.26.4x × $8.66 ÷ $25.74 = 8.88x
Period-end (fiscal year-end) value, not today's P/B
EV/EBITDA (FY2025 end)
21.1x
formula(market cap + interest-bearing debt − cash and equivalents) ÷ (operating income + depreciation & amortization)
e.g.($184,817M + $6,555M − $7,241M) ÷ ($8,289M + $435M) = 21.1x
termsEV/EBITDA · Market capitalization · Interest-bearing debt · EBITDA · Depreciation & amortization (D&A)
Period-end (fiscal year-end) value, not today's multiple
- ▲
Revenue grew +5.3% a year over 4 years (strong growth)
From $23.06B in FY2021 to $28.37B in FY2025. The annualized rate (CAGR) makes it possible to compare growth pace across companies of different sizes.
- ―
Operating margin held roughly flat: 29.9% → 29.2%
How much operating profit is left per $100 of revenue. It moved -0.7 points over 4 years — pricing power, cost control, and product mix all show up here.
- ▲
Equity ratio is 56.2% (a high level of financial stability)
The share of total assets funded by equity rather than debt. 50%+ is often read as low bankruptcy risk, though the right level varies by industry (real estate and leasing run lower, for instance).
- ▲
Free cash flow was positive in 5 of 5 years
Operating cash flow minus capital expenditures: the cash left over after funding the business’s own investment, available for dividends, buybacks, acquisitions, or debt paydown. A negative year can mean heavy investment, or weak core earnings — worth distinguishing.
- ▲
ROE averaged 45.1% over 5 years (latest: 35.5%)
How much profit was generated on shareholders’ equity. Roughly 10%+ is often cited as solid for a U.S. company, though this varies a lot by industry and capital intensity.
06
Business model
Semiconductor Systems
Equipment for chipmaking steps — deposition, etch, patterning, transistor and interconnect fabrication, metrology and inspection, and advanced packaging — sold to foundry and logic, DRAM, and NAND makers. Applied can combine and co-optimize these steps into integrated solutions.
01 what it draws on
Inputs & resources
- R&D (mainly in the U.S., India, and Israel)
- Distributed manufacturing in the U.S., Singapore, and elsewhere in Asia and Europe
- Parts, some from single suppliers
02 what it does
Activities
- Designing and building fab equipment
- Co-optimizing process steps with customers
03 who it serves
Customers
- Chipmakers — foundry/logic 67%, DRAM 26%, NAND 7% of segment revenue in FY2025
04 how money comes in
How it earns
- Equipment sales
Semiconductor Systems: how it makes money
- Revenue $20.8B (+4%) and segment operating income $7.38B (35.5% margin) in FY2025.
- Backlog of $7.1B at year-end.
Applied Global Services (AGS)
Services, spare parts, and factory automation software for Applied's large installed base, plus (through FY2025) 200mm equipment for non-leading-edge chips.
01 what it draws on
Inputs & resources
- Field engineers near customer sites
- Global spare parts distribution
02 what it does
Activities
- Servicing and upgrading installed tools
- Selling 200mm equipment (moved to Semiconductor Systems from fiscal 2026)
03 who it serves
Customers
- Fab operators worldwide
04 how money comes in
How it earns
- Transactional and subscription service contracts
- Spare parts
Applied Global Services (AGS): how it makes money
- Revenue $6.39B (+3%) and segment operating income $1.79B (28.1% margin) in FY2025.
- Service backlog of $7.1B.
Revenue by segment (FY2025)
Unit: $M — bar length = revenue, (%) = share of total company revenue, margin = segment profit ÷ segment revenue × 100
Semiconductor Systems
20,798 (77%)profit 7,379 · margin 35.5%
Applied Global Services
6,385 (23%)profit 1,792 · margin 28.1%
Source: Form 10-K (FY2025) — MD&A and Note 15 Profit is segment operating income. Corporate and Other — mainly display equipment — had about $1.2B of revenue and isn't shown.
07
Where it earns
Many U.S.-listed companies earn most of their revenue outside the U.S. — this breaks down revenue by country/region so it's clear where the business actually makes its money.
Largest market (FY2025)
China — 30% of revenue
Revenue by country / region (FY2025)
Unit: $M — bar length = revenue, (%) = share of total company revenue
China
8,529 (30%)Taiwan
6,857 (24%)Korea
5,608 (20%)United States
3,063 (11%)Japan
2,273 (8%)Southeast Asia
1,076 (4%)Europe
962 (3%)
Source: Form 10-K (FY2025) — Note 15, geographic information China fell to 30% of revenue from 37% in FY2024; Taiwan rose 71%.
08
Contract structure
Short-term or spot sales carry different earnings quality than long-term or auto-renewing contracts — this shows how the company actually contracts with its customers.
Applied sells equipment against orders and customer commitments, and services under transactional and subscription contracts. Its business depends on chipmakers' capital spending, which swings with semiconductor demand, factory utilization, financing, trade policy, and government incentives.
Equipment orders
Semiconductor Systems: $20.8B (73% of FY2025 revenue)
Typical term: Backlog of accepted orders; customers may delay or cancel before shipment, subject to possible penalties
About 31% of total backlog isn't expected to be filled within 12 months.
Service, spares, and software
AGS: $6.4B (23%)
Typical term: Transactional and subscription service contracts and maintenance fees
AGS backlog of $7.1B includes contractual service revenue.
09
Customers & suppliers
Who the company sells to and buys from. Companies rarely name either, so named counterparties come only from the company's own filings and press releases; otherwise this lists the concentration figures the 10-K discloses.
Customers
Semiconductor manufacturers — foundries, logic, DRAM, and NAND makers — and display makers; sold almost entirely through Applied's direct sales force.
Named by the company
The 10-K doesn't name customers.
What the filings disclose
- Two customers accounted for about 19% and 15% of FY2025 revenue. (Form 10-K (FY2025), Item 1)
- By region, FY2025 revenue was China $8.5B, Taiwan $6.9B, Korea $5.6B, U.S. $3.1B, Japan $2.3B. (Form 10-K (FY2025), Note 15)
Suppliers
Qualified vendors and contract manufacturers supplying parts, components, and subassemblies.
Named by the company
None named in the 10-K or the company’s press releases.
What the filings disclose
- Some key parts can be obtained only from a single qualified supplier or a limited group. (Form 10-K (FY2025), Item 1)
10
Competitors & peers
Competitors the 10-K names, and the peer group the company itself chose in its proxy statement. Nothing here is this site's own pick.
Applied's 10-K says competition exists across all its segments, from small regional companies that may benefit from policies favoring domestic firms to global diversified companies, and that it could face more competition from Chinese domestic equipment makers. AGS competes with third-party service providers and customers' in-house service. No company is named.
Competitors named in the 10-K
Applied's 10-K doesn't name competitors.
Peer group the company chose
Fiscal 2025 compensation peer group, from the proxy statement. Peers are companies the board considers comparable — for example when setting executive pay — not necessarily direct competitors.
High-technology companies with comparable businesses with which Applied is likely to compete for executive talent, screened on product manufacturing and size; unchanged for fiscal 2026.
- Advanced Micro Devicessite ↗
- KLAsite ↗
- Analog Devicessite ↗
- Lam Researchsite ↗
- Broadcomsite ↗
- Micron Technologysite ↗
- Cisco Systemssite ↗
- NVIDIAsite ↗
- Corningsite ↗
- NXP Semiconductorssite ↗
- Intelsite ↗
- Qualcommsite ↗
- IBMsite ↗
- Texas Instrumentssite ↗
Company names link to this site’s analysis where one exists; “site ↗” opens the company’s own website.
11
Five years of financials
Each chart's axis holds a single unit (never mixing dollars, %, and $/share). The table's per-period header links to the filing the numbers came from.
Revenue over time
Unit: $M
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2025-12-12
Profit over time (operating → net)
Unit: $M
- Operating income
- Pretax income
- Net income
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2025-12-12
Margins over time
Unit: %
- Operating margin
- Net margin
formulaoperating income ÷ revenue × 100
formulanet income attributable to the company ÷ revenue × 100
Cash flow over time
Unit: $M (below zero = cash went out)
- Operating CF
- Investing CF
- Free CF
formulacash flow from operations − capital expenditures
termsFree cash flow (FCF) · Cash flow from operations (operating CF) · Capital expenditures (capex)
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2025-12-12
Financial stability & capital efficiency
Unit: %
- Equity ratio
- ROE
formulatotal equity ÷ total assets × 100 (as reported in the 10-K)
termsStockholders’ equity · Total assets
formulanet income ÷ average equity (beginning + ending, ÷2) × 100 (as reported in the 10-K)
termsNet income (attributable to the company) · Stockholders’ equity
Earnings per share (EPS) and dividend per share
Unit: $
- EPS
- Dividend per share
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2025-12-12
| Line item | FY202110-K on EDGAR ↗ | FY202210-K on EDGAR ↗ | FY202310-K on EDGAR ↗ | FY202410-K on EDGAR ↗ | FY202510-K on EDGAR ↗ |
|---|---|---|---|---|---|
| Income statement ($M) | |||||
| Revenue | 23,063 | 25,785 | 26,517 | 27,176 | 28,368 |
| Operating income | 6,889 | 7,788 | 7,654 | 7,867 | 8,289 |
| Pretax income | 6,771 | 7,599 | 7,716 | 8,152 | 9,271 |
| Net income (attributable) | 5,888 | 6,525 | 6,856 | 7,177 | 6,998 |
| Revenue growthcalc(this year’s revenue − last year’s revenue) ÷ last year’s revenue × 100 | — | 11.8% | 2.8% | 2.5% | 4.4% |
| Operating margincalcoperating income ÷ revenue × 100 | 29.9% | 30.2% | 28.9% | 28.9% | 29.2% |
| Net margincalcnet income attributable to the company ÷ revenue × 100 | 25.5% | 25.3% | 25.9% | 26.4% | 24.7% |
| Balance sheet ($M) | |||||
| Total assets | 25,825 | 26,726 | 30,729 | 34,409 | 36,299 |
| Total equity | 12,247 | 12,194 | 16,349 | 19,001 | 20,415 |
| Interest-bearing debtSum of short- and long-term borrowings, notes/bonds payable | 5,452 | 5,457 | 5,561 | 6,959 | 6,555 |
| Equity ratio | 47.4% | 45.6% | 53.2% | 55.2% | 56.2% |
| ROE | 48.1% | 53.4% | 48.0% | 40.6% | 35.5% |
| Cash flow ($M) | |||||
| Operating CF | 5,442 | 5,399 | 8,700 | 8,677 | 7,958 |
| Investing CF | -1,216 | -1,357 | -1,535 | -2,327 | -2,782 |
| Financing CF | -4,591 | -7,043 | -3,032 | -4,470 | -5,977 |
| Free cash flowcalccash flow from operations − capital expenditures | 4,774 | 4,612 | 7,594 | 7,487 | 5,698 |
| Cash and equivalents | 4,995 | 1,995 | 6,132 | 8,022 | 7,241 |
| Per share & other | |||||
| EPS ($) | 6.40 | 7.44 | 8.11 | 8.61 | 8.66 |
| BVPS ($) | 13.73 | 14.45 | 19.63 | 23.23 | 25.74 |
| Dividend per share ($) | 0.94 | 1.02 | 1.22 | 1.52 | 1.78 |
| Payout ratiocalcdividend per share ÷ diluted EPS × 100 | 14.7% | 13.7% | 15.0% | 17.7% | 20.6% |
| P/E (x) | 21.4 | 12.1 | 16.2 | 21.7 | 26.4 |
| EV/EBITDA (x)calc(market cap + interest-bearing debt − cash and equivalents) ÷ (operating income + depreciation & amortization) | 17.3 | 10.0 | 13.5 | 18.7 | 21.1 |
| P/B (x)calcP/E × EPS ÷ BVPS (= period-end share price ÷ book value per share) | 9.95 | 6.21 | 6.69 | 8.03 | 8.88 |
P/B and EV/EBITDA use each period’s period-end (fiscal year-end) figures, not the current share price. Figures without a "calc" tag are as reported in the Form 10-K (five-year selected financial data and the consolidated financial statements), pulled automatically from SEC EDGAR. Where a later filing restated a prior period, the restated figure is used.
12
Is ROIC above WACC?
ROIC (the return on money invested in the business) above WACC (the cost of raising that money) means the company is creating value. WACC is an estimate, so its assumptions can be adjusted below.
ROIC (FY2025)
24.7%
formulaoperating income × (1 − tax rate) ÷ invested capital × 100 *invested capital = interest-bearing debt + total equity (average of beginning/ending)
e.g.$8,289M × (1 − 21%) ÷ $26,465M × 100 = 24.7%
termsOperating income · Effective tax rate · Invested capital · Interest-bearing debt · Total equity
WACC (this site’s estimate)
11.78%
formulacost of equity × equity weight + cost of debt × (1 − tax rate) × debt weight
e.g.Equity weight: $184.82B ÷ ($184.82B + $6.56B) = 96.6%
e.g.Debt weight: $6.56B ÷ ($184.82B + $6.56B) = 3.4%
e.g.WACC: 12.1% × 96.6% + 4.1% × (1 − 21%) × 3.4% = 11.78%
termsCost of equity · Equity weight (E/(D+E)) · Cost of debt · (1 − tax rate) · Debt weight (D/(D+E)) · Market capitalization
WACC 11.78% is this site’s estimate under the assumptions below (not a figure the company has published)
- Risk-free rate
- 4%
- β
- 1.47 (price-derived adjusted beta)
- Equity risk premium
- 5.5%
- Cost of equity
- 12.08%
- Cost of debt
- 4.10%
- Effective tax rate
- 21%
- Capital structure (equity : debt)
- 97% : 3%
ROIC over time, vs. WACC
Unit: % — bars = each period's ROIC, horizontal line = latest WACC. Bars above the line are green, below are red
- ROIC (above WACC)
- ROIC (below WACC)
- WACC 11.78%
formulaoperating income × (1 − tax rate) ÷ invested capital × 100 *invested capital = interest-bearing debt + total equity (average of beginning/ending)
termsOperating income · Effective tax rate · Invested capital · Interest-bearing debt · Total equity
formulacost of equity × equity weight + cost of debt × (1 − tax rate) × debt weight
termsCost of equity · Equity weight (E/(D+E)) · Cost of debt · (1 − tax rate) · Debt weight (D/(D+E)) · Market capitalization
Try different WACC assumptions
β and the equity risk premium are estimates with a real range of plausible values — move the sliders to check whether ROIC > WACC still holds. The defaults reflect 2026-09.
Initial β: 1.47 (price-derived adjusted beta. Raw β 1.70, R² 0.30, 130 weeks)
formula0.67 × β + 0.33 (β = the slope of weekly stock returns regressed on weekly market returns)
e.g.0.67 × 1.696 + 0.33 = 1.466
termsβ (beta)
Period 2024-04-05–2026-10-02, using S&P 500 ETF (SPY) as the market proxy. Source: Yahoo Finance price history.
formularisk-free rate + β × equity risk premium
e.g.4.0% + 1.47 × 5.5% = 12.1%
termsCAPM · Risk-free rate · β (beta) · Equity risk premium (market risk premium)
formulaP/E × net income ≈ period-end share price × shares outstanding (= market cap)
termsP/E · Net income (attributable to the company) · Market capitalization · Market value of equity
formulainterest expense ÷ interest-bearing debt × 100 (clamped to 0–10%; falls back to the risk-free rate if there’s no debt)
13
What the price implies (DCF)
A company's value can be written as its free cash flow divided by (cost of capital − perpetual growth). Working that backwards from the market's valuation shows how much growth the share price assumed — compared here with the company's actual past growth.
Growth the price implies (FY2025)
8.7%
Perpetual FCF growth: g = r − FCF ÷ EV = 11.8% − 3.1%
Past FCF growth (FY2021–FY2025)
+4.5%
Compound annual rate, 4 years
Past revenue growth (FY2021–FY2025)
+5.3%
Compound annual rate, 4 years
Inputs (FY2025): free cash flow $5.7B (operating CF − capex); enterprise value $182.8B = market cap $184.82B + debt $6.56B − cash and short-term investments $8.57B; r = WACC of 11.8% using this page’s default assumptions (β 1.47, risk-free 4.0%, market premium 5.5%).
Try your own assumptions
V = FCF ÷ (r − g). It starts at the implied growth rate, where the theoretical value equals today’s enterprise value.
Theoretical enterprise value
$183.81B
FCF $5.7B ÷ (11.8% − 8.7%)
Theoretical ÷ actual enterprise value
1.01x
Above 1x: these assumptions value the business above the market did
How sensitive the answer is
Theoretical ÷ actual enterprise value for each combination of r and g.
| g \ r | 9.8% | 10.8% | 11.8% | 12.8% | 13.8% |
|---|---|---|---|---|---|
| 0% | 0.32x | 0.29x | 0.26x | 0.24x | 0.23x |
| 2% | 0.40x | 0.35x | 0.32x | 0.29x | 0.26x |
| 4% | 0.54x | 0.46x | 0.40x | 0.35x | 0.32x |
| 6% | 0.82x | 0.65x | 0.54x | 0.46x | 0.40x |
| 8% | 1.73x | 1.11x | 0.82x | 0.65x | 0.54x |
A simplified model for seeing what the market price assumes, not a forecast or a target price. It treats free cash flow as growing at one constant rate forever; the result swings widely with small changes in r and g, and is undefined when g reaches r. Free cash flow here is operating cash flow minus capex, which is after interest — a full DCF of enterprise value would use cash flow before interest. Market cap and enterprise value use the fiscal year-end price, not today’s.
14
Earnings quality
The same reported profit can mean different things depending on whether it's backed by cash, driven by the core business, or the result of a one-off item. Four checks below.
- ✓
Operating CF ÷ net income: averages 1.07x
Profit is backed by cash coming in.
- ✓
Accrual ratio (latest): -2.7%
A small share of profit rests on accounting estimates.
- ✓
Core-earnings share (operating income ÷ pretax income): 89%
Most profit comes from core operations.
- ✓
Days sales outstanding: 78 → 67 days
No major slowdown in collecting on sales.
Operating CF vs. net income
Unit: $M — operating CF above net income means profit is backed by cash
- Operating CF
- Net income
formulacash flow from operations ÷ net income attributable to the company
termsCash flow from operations (operating CF) · Net income (attributable to the company)
formula(net income − operating CF) ÷ average total assets × 100
termsNet income (attributable to the company) · Cash flow from operations (operating CF) · Total assets
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2025-12-12
Profit bridge (FY2025)
Unit: $M — what moved profit from operating income to net income
- Profit (each stage)
- Pushed profit up
- Pushed profit down
formulaoperating income ÷ income before income taxes × 100
termsOperating income · Income before income taxes (pretax income)
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2025-12-12
Receivables & inventory days
Unit: days — days grow when receivables or inventory build up faster than sales
- Days sales outstanding
- Days inventory outstanding
formulaperiod-end receivables ÷ revenue × 365
formulaperiod-end inventory ÷ revenue × 365
termsInventory · Revenue (net sales)
Worked examples (latest period)
formulacash flow from operations ÷ net income attributable to the company
e.g.$7,958M ÷ $6,998M = 1.14x
termsCash flow from operations (operating CF) · Net income (attributable to the company)
formulaoperating income ÷ income before income taxes × 100
e.g.$8,289M ÷ $9,271M × 100 = 89%
termsOperating income · Income before income taxes (pretax income)
formulaperiod-end receivables ÷ revenue × 365
e.g.$5,185M ÷ $28,368M × 365 = 67 days
15
Strengths & weaknesses
Strengths
1. Broadest equipment portfolio
Applied describes its Semiconductor Systems portfolio as the industry's most comprehensive and can co-optimize multiple process steps into integrated solutions.
Evidence: Form 10-K (FY2025) Item 1
2. Record revenue and steady margins
Revenue grew every year from $23.1B (FY2021) to $28.4B (FY2025), and operating income reached $8.29B.
Evidence: SEC EDGAR XBRL
3. Recurring service business
AGS earns $6.4B a year servicing a large installed base, with a 28% segment margin.
Evidence: Form 10-K (FY2025) MD&A
4. Heavy R&D
R&D spending rose from $2.49B (FY2021) to $3.57B (FY2025).
Evidence: SEC EDGAR XBRL
Weaknesses
1. Customer concentration
Two customers accounted for about 19% and 15% of FY2025 revenue.
Evidence: Form 10-K (FY2025) Item 1
2. China exposure under export controls
China was 30% of revenue (down from 37%), and export rules require licenses that may not be granted, which the 10-K says could let foreign and Chinese domestic companies displace Applied.
Evidence: Form 10-K (FY2025) Note 15 and Item 1A
3. Cyclical demand
Sales depend on chipmakers' capital spending, which varies significantly with demand, utilization, and financing.
Evidence: Form 10-K (FY2025) Item 1
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What draws investors to it
Why the stock can look attractive to investors — each point paired with what has to hold for it to stay true, and the opposing view. This is this site's analysis, not a recommendation to buy or sell.
P/E (FY2025)
26.4x
Price at fiscal year-end ÷ diluted EPS
Dividend yield (FY2025)
0.78%
Dividends per share ÷ fiscal year-end price
Payout ratio (FY2025)
21%
Dividends per share ÷ diluted EPS
FCF yield (FY2025)
3.1%
(Operating CF − capex) ÷ market cap
1. Picks and shovels for chips and AI
Applied supplies equipment used to produce virtually every semiconductor, including AI and data center chips, and revenue has grown every year since FY2021.
- What has to hold
- Chipmakers keep investing in leading-edge capacity.
- The other side
- Equipment demand is cyclical, and two customers account for about a third of revenue.
Evidence: Form 10-K (FY2025) Item 1; SEC EDGAR XBRL
2. Large shareholder returns
Dividends per share nearly doubled from $0.94 (FY2021) to $1.78 (FY2025), shares outstanding fell from 892M to 793M, and about $14.0B of buyback authorization remained.
- What has to hold
- Cash flow stays strong.
- The other side
- Capital spending more than tripled since FY2021 to $2.26B, reducing free cash flow in FY2025.
Evidence: SEC EDGAR XBRL; Form 10-K (FY2025) Item 5
P/E, dividend yield, and payout ratio use the FY2025 year-end share price. Applied's beta is high (1.70).
17
Resilience
How well the company could absorb a bad year: its financial buffer, how its revenue and profit held up in the worst year on record, and what the 10-K says about the business's exposure to shocks. Figures and filing statements only — no overall rating.
1. Financial buffer (FY2025)
Cash & short-term investments ÷ debt due within a year
85.7x
$8.57B vs. $100M
Interest coverage (operating income ÷ interest expense)
30.8x
$8.29B vs. $269M
Free cash flow ÷ dividends paid
4.1x
$5.7B vs. $1.38B (FCF = operating CF − capex)
2. Worst year in the record, and the recovery
| Figure | Worst year-over-year change | Back to the prior level? |
|---|---|---|
| Revenue | No decline in the record | — |
| Operating income | -1.7% in FY2023 ($7.79B → $7.65B) | Yes, by FY2024 |
Covers only the 5 fiscal years on record (FY2021–FY2025), which may not include a full recession — the worst year here isn’t necessarily how the company would fare in a severe downturn.
3. Business resilience (from the 10-K)
Service base
AGS sells service, spares, and software that customers buy to optimize the performance of Applied's large installed base — $6.4B of revenue in FY2025.
Source: Form 10-K (FY2025), Item 1 and MD&A · See Contract structure
Strong balance sheet
Cash and short-term investments of about $8.6B against about $6.6B of debt at fiscal year-end 2025.
Source: SEC EDGAR XBRL
Backlog
Total backlog of $15.0B at fiscal year-end, though customers may delay or cancel orders before shipment.
Source: Form 10-K (FY2025), Item 1
Regulatory exposure
Export controls can cut off sales to some China customers with little notice.
Source: Form 10-K (FY2025), Item 1A
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Risks (including geopolitical)
Starting from the 10-K's Risk Factors section, organized by category — geopolitical, currency, raw materials, regulatory, disaster, and more — with impact and likelihood assessed by this site.
Risk map
Vertical = impact on results, horizontal = likelihood. Upper right = most severe. Numbers match the list below (placement is this site’s own assessment).
Likelihood →
"Company disclosure" vs. "this site’s assessment"
The description and mitigation for each risk are this site’s summary of the 10-K’s "Risk Factors" section. Impact and likelihood are this site’s own assessment, not the company’s — where the company discloses its own likelihood assessment, that is noted in the summary.
Impact is judged from how large the affected business is relative to total revenue/profit, and from the risk’s track record of moving results in the past. Likelihood is judged from the filing’s wording and the current business environment (already occurring, or recurring).
Geopolitical risk highlights
- [1]U.S. export controls on China
- 1Geopolitical
U.S. export controls on China
- Company disclosure (summarized from the 10-K)
- Rules restricting sales of equipment, parts, and services to China have limited Applied's market and increased exposure to foreign and Chinese domestic competition; in February 2026 Applied paid $252.5M to settle a BIS inquiry over certain China shipments.
- Company’s stated mitigation
- Export compliance audits, training, and reporting under the February 2026 settlement.
- This site’s assessment
- Impact High / Likelihood High
- 2Customer/supplier concentration
Dependence on a few chipmakers
- Company disclosure (summarized from the 10-K)
- Two customers made up about a third of FY2025 revenue.
- Company’s stated mitigation
- Broad product portfolio across foundry, DRAM, and NAND.
- This site’s assessment
- Impact High / Likelihood Med
- 3Demand & macro
Semiconductor capital spending cycle
- Company disclosure (summarized from the 10-K)
- Customers' equipment spending depends on economic conditions, chip demand and pricing, utilization, financing, trade policy, and incentives.
- Company’s stated mitigation
- Not stated in the 10-K excerpts reviewed.
- This site’s assessment
- Impact Med / Likelihood High
- 4Supply chain
Single-source parts
- Company disclosure (summarized from the 10-K)
- Some key parts are available only from one qualified supplier or a limited group.
- Company’s stated mitigation
- Qualifying alternate suppliers, monitoring key suppliers, and holding inventories.
- This site’s assessment
- Impact Med / Likelihood Med
- 5Competition & technology shift
Chinese domestic competitors
- Company disclosure (summarized from the 10-K)
- Applied could see more competition from Chinese equipment makers backed by local incentives and helped by U.S. export controls.
- Company’s stated mitigation
- Technology differentiation.
- This site’s assessment
- Impact Med / Likelihood Med
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What to watch going forward
- China revenue as export rules change.
- Spending by the two largest customers.
- AI-driven demand for leading-edge logic and DRAM equipment.
- Results after the October 2025 workforce reduction.
20
Source documents
This page's financial figures come from the Form 10-Ks listed below. Check the original filings for full detail.
Last updated
Analysis last edited: October 4, 2026 · Financial data fetched: October 4, 2026 14:31 (SEC EDGAR) · Source 10-K filed: December 12, 2025
Next update expectedAfter FY2026’s 10-K is filed (roughly 60–90 days after fiscal year end (sooner for larger filers)), financials and analysis will be refreshed.
This page is this site’s own analysis based on public information, and does not represent Applied Materials, Inc.’s views. It is not a recommendation to buy or sell any security, and this site does not guarantee the accuracy of any figure or statement here. Always verify against the original source documents before making an investment decision.