Investment Thesis
Applied Materials demonstrates exceptional financial health with strong profitability metrics (28.9% net margin, 26.1% operating margin) and robust cash generation (1.0B free cash flow, 14.8% FCF margin). The company maintains solid liquidity (2.71x current ratio) and conservative leverage (0.30x debt/equity), though modest revenue growth of 4.4% YoY and declining net income (-2.5% YoY) suggest cyclical industry pressures that warrant monitoring.
AMAT Strengths
- Industry-leading profitability with 49% gross margin and 28.9% net margin
- Strong cash generation with 1.0B free cash flow and healthy FCF margin of 14.8%
- Conservative balance sheet with low leverage (0.30x debt/equity) and excellent interest coverage (15.5x)
- Solid liquidity position with 2.71x current ratio and 7.2B cash reserves
- Significant insider activity with 23 Form 4 filings in last 90 days suggesting confidence
AMAT Risks
- Decelerating growth with revenue up only 4.4% YoY and net income declining 2.5% YoY
- Relatively weak return on equity (9.3%) and return on assets (5.4%) despite high profitability
- Capital-intensive business with CapEx at 646M annually limiting flexibility
- Cyclical semiconductor equipment industry exposure to demand fluctuations
- Net margin of 28.9% appears elevated and may not be sustainable through industry cycles
Key Metrics to Watch
- Quarterly revenue growth trajectory to confirm stabilization or acceleration
- Free cash flow conversion and capital expenditure trends
- Return on equity improvement and working capital efficiency
- Debt/equity ratio maintenance and interest coverage sustainability
- Operating margin trends through semiconductor cycle
AMAT Financial Metrics
AMAT Profitability Ratios
AMAT Balance Sheet & Liquidity
AMAT 5-Year Financial Trend
5-Year Trend Summary: APPLIED MATERIALS INC /DE's revenue has grown significantly by 23% over the 5-year period, indicating strong business expansion. The most recent EPS of $8.11 reflects profitable operations.
AMAT Growth Metrics (YoY)
AMAT Quarterly Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q1 2026 | $7.0B | $1.2B | $1.45 |
| Q3 2025 | $6.8B | $1.7B | $2.05 |
| Q2 2025 | $6.6B | $1.7B | $2.06 |
| Q1 2025 | $6.7B | $1.2B | $1.45 |
| Q3 2024 | $6.4B | $1.6B | $1.85 |
| Q2 2024 | $6.6B | $1.6B | $1.86 |
| Q1 2024 | $6.7B | $1.7B | $2.02 |
| Q3 2023 | $6.4B | $1.6B | $1.85 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
AMAT Capital Allocation
AMAT SEC Filings
Access official SEC EDGAR filings for APPLIED MATERIALS INC /DE (CIK: 0000006951)