Company Overview
Applied Materials Inc designs and manufactures equipment used in semiconductor production. The company provides systems that enable wafer fabrication and materials engineering for chipmakers worldwide. It operates within the U.S. semiconductor industry and trades on the NASDAQ. The firm’s market capitalization is about USD 271 billion, with approximately 794 million shares outstanding.
Analysis of recent data
FundamentalsFor the year ended October 26 2025, reported USD figures show revenue of USD 28.37 billion, up 4.4% year over year. EBIT reached USD 8.29 billion, and net income USD 7.00 billion, reflecting solid profitability. Gross margin stood at 48.7%, and operating margin at 28.2%.
Cash totaled USD 7.24 billion against USD 6.56 billion of total debt, indicating a modest net cash position. Capital expenditure was USD 2.26 billion, while depreciation and amortization were USD 435 million, producing an FCFF proxy of about USD 4.19 billion before working‑capital changes.
Return on equity of 38.9% and a net profit margin of 27.8% highlight strong capital efficiency. The company’s beta of 1.69 suggests higher volatility relative to the market, while valuation multiples such as P/E 35 and EV/EBITDA 32.6 reflect investor confidence in sustained profitability.
Valuation
DCF / MultiplesAt a share price of USD 341.53, the stock trades well above the DCF‑implied range, suggesting investors are pricing in stronger growth and reinvestment returns than modeled. The valuation already assumes sustained high profitability and efficient reinvestment.
With a P/E of 35 and an EV/EBITDA of 32.6, the market appears to expect continued revenue expansion and margin stability. If growth or cash generation falter, the current premium could compress as expectations reset.
Conclusion
TakeawayThe company shows strong profitability and efficient capital use. Its balance sheet remains healthy with solid cash reserves. However, the market price already reflects high growth expectations. Investors may need patience if reinvestment returns take time to materialize.