Applied Materials Inc (AMAT) stock analysis
Applied Materials Inc (AMAT) clears 3 of this site's 8 mechanical value filters, 6 of 8 Buffett-style checks and 3 of 5 Lynch-style checks. At $375.58 it trades 238.0% above this site's neutral DCF value (a margin of safety of -238.0%). Its earnings quality rates Strong and it returns +1.7% to shareholders net of dilution. Figures are as of October 23, 2026, from SEC filings and market data refreshed weekly; this is educational analysis, not investment advice.
Data as of October 23, 2026. Refreshed weekly from SEC filings and market data.
What does Applied Materials do?
Applied Materials makes the machines chipmakers use to build semiconductors, mainly deposition, etching and other processing equipment. Its sales rise and fall with how much chip and display makers spend on new factories.
What stands out about Applied Materials?
- The share price implies more than 40% yearly growth. At $375.58, free cash flow per share would have to grow faster than 40% a year, fading to 2.5% by year 10, for this site's DCF to match the price. Change the assumptions.
- Misses 3 of the 8 value filters. It fails Trailing P/E < 25 (35.02), Price/Book < 8 (12.66) and Price/Sales < 7 (10.52); the other 3 pass and 2 were not evaluated. See every filter.
- The margin of safety is rising. It went from -348% on Oct 7 to -238% on Oct 23 across 5 weekly readings. See the trend.
- Strongest against peers: return on equity. At 40% (peer median 25%) it ranks 6th of 20 among semiconductors stocks this site tracks. See the ranking.
- Clears all 4 compounder lenses. It grows profit on little capital, reports real earnings, returns cash to owners and is not priced for perfection on this site's tests. See Compounders at a Fair Price.
How has Applied Materials' share price moved?
The interactive price chart needs JavaScript.
Is Applied Materials undervalued? The value diligence check
Every value-investing signal this site computes for this stock, gathered in one place: the same real numbers from the tools below, not a new score.
- Margin of safety (DCF) -238.0%
- P/E vs. its own history 35.0x · at/above its priciest point Real range: 11.8x–26.4x over 5 years (net income per diluted share from each fiscal year's 10-K, paired with the real closing price at that fiscal year-end).
- Wall St. analyst rating Buy · 4.16/5 44 analysts this month: 12 strong buy, 27 buy, 5 hold, 0 sell, 0 strong sell (Finnhub). Up from 4.13 last month.
- Altman Z″-Score (bankruptcy risk) 10.17 · Safe zone
- Earnings quality (is the profit real?) Strong · all 5 checks clean Beneish M-score −2.57 · accruals −2.7% of assets · 120% of profit arrived as cash · stock comp 2.4% of revenue · share count −2.2% a year. From the latest 10-K (year to Oct 2025) - see the Earnings Quality Screener for how each check is scored.
- Shareholder yield (cash back to owners) +1.7% net Latest fiscal year (2025): dividends 0.4% + buybacks 1.5% − stock comp 0.2%, as a share of today's market cap. Over 14 years its split-adjusted share count fell 39%. See Shareholder Yield Leaders.
- Capital needed to grow (See's test) $1.28 per $1 of new profit · FlightSafety-like Operating profit $3.5B → $7.9B, capital needed $6.7B → $12B, 2016–2025 (3-year averages); return on capital now 64% before tax. Buffett's See's Candies needed $0.42 per $1 of new profit, FlightSafety $3.20, a typical grower about $5. Cyclical: the answer depends on where in its cycle the window starts and ends. See Capital-Light Compounders.
- PEG (growth at a reasonable price) 1.20 · Above fair P/E 35.0× ÷ 29.3% a year of growth behind it. 119th lowest of 447 stocks with a usable PEG. Lynch's fair value is a PEG of 1; a very high PEG usually means almost no growth, a very low one a profit spike. See PEG Ratio Ranking.
- Compounder lenses (4) 4 of 4 Capital-light growth: cleared; Profit is real: cleared; Cash to owners: cleared; Fair price (PEG): cleared. See Compounders at a Fair Price, which also lets you move the PEG bar.
- Value trap check Clear
- Munger's Inversion Check 3 flags
- Standing vs. sector peers 4 of 7 measures above the median Compared with the 19 other semiconductors stocks this site tracks: 2 in the top third, 2 in the bottom third.
- Dividend payout sustainability 0/6 · clean
How does Applied Materials compare with its peers?
4 of 7 measures sit above the median of the 19 other semiconductors stocks tracked here, 2 in the top third and 2 in the bottom third.
- P/E ratiolower is cheaper · peer median 42.5× 35.0× ✓6th of 19
- Free-cash-flow yieldhigher is cheaper · peer median 2.5% 1.7% ✕14th of 20
- Return on equityhigher is better · peer median 25% 40% ✓6th of 20
- Net marginhigher is better · peer median 26.9% 30.1% –8th of 20
- Revenue growthhigher is better, year on year · peer median 23.8% 7.8% ✕15th of 19
- Debt / equitylower is safer · peer median 0.29 0.26 –8th of 20
- Dividend yieldamong dividend payers · peer median 0.66% 0.47% –11th of 16
Peers are the stocks this site tracks in the same sector group, not every listed competitor. The bar runs from the weakest peer (left) to the strongest (right); the tick is the middle. Measures that don't apply to a sector (cash-flow yield for banks, debt for financials) are left out.
What would Buffett & Lynch say?
Buffett's checklist is built around durable, profitable businesses bought at sensible prices, and AMAT doesn't clear enough of it yet. In its favor: AMAT is currently earning a strong return on shareholders' equity, and has kept that profitability up over five years, not just this year, carries a conservative amount of debt relative to equity, converts sales into profit at healthy margins, has grown earnings per share at a solid clip over five years, and earns many times its interest expense, so debt service isn't a worry. Where it comes up short: AMAT is trading above what a conservative discounted-cash-flow estimate says it's worth right now, and trades rich relative to owner earnings, the real cash the business could pay out.
- ROE (TTM) > 11% ✓
- ROE (5yr avg) > 11% ✓
- Debt/Equity < 0.5 ✓
- Pretax margin > 15% ✓
- EPS growth (5yr) > 7% ✓
- Interest coverage > 5x ✓
- Trading below intrinsic value (DCF) ✕
- Price vs. owner earnings < 25x ✕
- Bonus: returning capital via buybacks FY2025
Lynch looked for growth stories that weren't overpriced for that growth, and AMAT falls short of his bar. In its favor: AMAT is growing earnings 20-50% a year, his classic fast-grower zone, isn't leaning on debt to fund that growth, and isn't asking too much even by a fast grower's usual richer multiple. Where it comes up short: AMAT doesn't clear the tighter PEG bar a fast grower needs to justify its pace, and isn't generating enough free cash flow to justify a fast grower's richer price.
- PEG < 1 (stricter for fast growers) ✕
- EPS growth 20%-50% ✓
- Debt/Equity < 0.5 ✓
- P/E < 40 ✓
- Price/FCF < 40 ✕
Quantitative approximations of each investor's documented approach, not endorsed by either investor or their estates - commentary, not this site's actual ranking criteria. Buffett never published a numeric checklist: only 2 of his 8 checks here trace to his own documented concepts ("owner earnings," from his 1986 shareholder letter, and "price is what you pay, value is what you get," his case against fixed P/E/P/B ceilings) - the other 6 (ROE, debt, margins, growth, interest coverage) use commonly-cited thresholds that are not numbers he himself published. The 8 hard filters below (plus the Munger check and Graham margin of safety) are this site's real, mechanical screen and are computed completely independently of the checklists above.
Berkshire Hathaway's own filing
Which of the 8 value filters does Applied Materials pass?
- Market Cap > $25B $324.5B
- Trailing P/E < 25 35.02
- PEG Ratio < 1.5 1.20
- Price/Book < 8 12.66
- Price/Sales < 7 10.52
- EPS Growth YoY > -5% +43.0%
- vs 50-day MA (±12%) Not evaluated †
- vs 200-day MA (±12%) Not evaluated †
What is Applied Materials' margin of safety?
-348% on 2026-10-07 → -238% on 2026-10-23 (5 weekly readings).
Where is Applied Materials in its 52-week range?
What is the short interest in Applied Materials?
13,530,729 shares short as of 2026-09-30 (FINRA settlement date). Reported twice a month, so this only changes roughly every two weeks, not daily.
What could go wrong with Applied Materials? Munger's inversion check
"Invert, always invert." Instead of reasons to buy, these are reasons to hesitate, not a verdict, and not everything worth knowing about a business.
- Margin of safety, even in the bull case -100%
- Short interest under 5% of float 1.7%
- Passes most of the 6 fundamental filters 3/6 passed
- Price run-up backed by value, not just momentum +81% off 52wk low
- Debt/equity stable since 2016 0.45 → 0.32
Doesn't cover circle of competence, management quality, or accounting concerns: those need judgment, not data.
How much have Applied Materials shareholders gained per year?
Earnings growth per share plus dividend.
An earnings-based proxy, not a stock-price total return - it doesn't capture multiple expansion/contraction or reinvested dividends. EPS from AMAT's own 10-K filings; dividend yield is the current trailing yield on today's price, from the same weekly fetch as the rest of this site.
What do Applied Materials' 10-year financials show?
From AMAT's own 10-K filings (SEC EDGAR): up to the last 10 fiscal years. Press any year's bars for the exact figures.
Frequently asked questions about Applied Materials
What kind of company is Applied Materials?
Applied Materials makes the machines chipmakers use to build semiconductors, mainly deposition, etching and other processing equipment. Its sales rise and fall with how much chip and display makers spend on new factories. This site groups it with Semiconductors stocks.
Is Applied Materials trading above or below its DCF value?
At $375.58, AMAT trades 238.0% above this site's neutral DCF value of $111.12 per share, a margin of safety of −238.0%. That DCF projects free cash flow for 10 years, with growth starting at 8% and fading to 2.5%, discounted at 10%; it is one set of assumptions, not a forecast. Test your own in the Intrinsic Value Calculator.
How many of this site's 8 value filters does Applied Materials pass?
AMAT passes 3 of 8. It passes Market Cap > $25B ($324.5B), PEG Ratio < 1.5 (1.20) and EPS Growth YoY > -5% (+43.0%). It misses Trailing P/E < 25 (35.02), Price/Book < 8 (12.66) and Price/Sales < 7 (10.52). vs 50-day MA (±12%) and vs 200-day MA (±12%) were not evaluated, because the moving-average checks only run on stocks that clear the fundamentals first. The 8-filter list shows every stock that passes all of them.
Is Applied Materials's P/E ratio high or low compared with its own history?
AMAT trades at 35.0× trailing earnings. At the end of each of its last 5 fiscal years its P/E was between 11.8× and 26.4× (average 19.3×), so today's multiple is at or above the highest of those years. Each year's P/E pairs net income per diluted share from the 10-K with the closing price at that fiscal year-end.
When does Applied Materials report earnings next?
Applied Materials's next earnings report is expected on November 12, 2026 after the market closes, with analysts expecting earnings of $4.13 per share. Dates come from the Finnhub earnings calendar and can move. In its last 4 quarters it beat the estimate 4 times, by an average of +3.5%.
Does Applied Materials raise any of Munger's inversion flags?
AMAT fails 3 of the 5 tests in this site's Munger-style inversion check, so it raises 3 flags: Margin of safety, even in the bull case (-100%); Passes most of the 6 fundamental filters (3/6 passed); and Price run-up backed by value, not just momentum (+81% off 52wk low). It passes Short interest under 5% of float and Debt/equity stable since 2016. Munger's habit was to invert the question and look for reasons to hesitate. These flags are data-driven prompts, not a verdict, and they cannot judge management, competitive position or accounting risk.
Where do these numbers come from?
- Financial statements: Applied Materials's 10-K annual report for the year ended Oct 26, 2025, filed Dec 12, 2025 (filing index). Every earlier year in the 10-year financials comes from the company's older 10-K filings, all listed on SEC EDGAR.
- Prices and market data: quotes, P/E and analyst ratings from Finnhub; daily price history and the 52-week range from Twelve Data, both refreshed weekly. Short interest comes from FINRA, reported twice a month.
- How to check a figure: click any number in the card above to see its exact source, and read the Editorial Standards for every rule behind the checks.
About this Applied Materials Inc analysis
This page shows every value-investing check the site runs on Applied Materials Inc (AMAT) in one place: the 8 mechanical filters, the Buffett and Lynch checklists, a margin of safety from a disclosed DCF, earnings quality, shareholder yield and how it ranks against its sector peers. The numbers come from SEC filings and public market data, refreshed weekly, and the same rules apply to every stock on the stock list. See Editorial Standards for the sources and the rules, or run your own filters in the stock screener.