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Applied Materials Inc AMAT

Morningstar Rating
$235.86 −1.74 (0.73%)
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Company Report

Applied Materials Earnings: We Raise Our Medium-Term Growth Forecast but Shares Are Still Overvalued

We raise our fair value estimate for shares of wide-moat Applied Materials to $168 per share, from $152, as we raise our medium-term growth estimates. We are increasingly confident in Applied’s ability to generate above-market growth from cutting-edge technologies like gate all-around, or GAA, transistors and high-bandwidth memory, or HBM. Fiscal second-quarter results and fiscal third-quarter guidance provided modest upside to our estimates, but our valuation increase is rooted in longer-term assumptions. In fiscal 2024, Applied’s results are being driven by strong DRAM and leading-edge logic chip equipment sales. Long-term, we view Applied as well-positioned, with its broad and moaty portfolio of equipment to continue gaining share in cutting-edge applications for new chips. Despite a strong fundamental opportunity, we continue to view Applied’s valuation as challenging.

Price vs Fair Value

AMAT is trading within a range we consider fairly valued.
Price
$237.64
Fair Value
$236.00
Uncertainty
High
1-Star Price
$822.40
5-Star Price
$518.90
Economic Moat
Ftdw
Capital Allocation
Tnpbmwbw

Bulls Say, Bears Say

Bulls

Applied Materials is the largest WFE provider in the world, with the broadest portfolio and the largest R&D budget of its peers.

Bears

We consider Applied Materials to be a generalist in WFE and competes with more specialized competitors like Lam Research and KLA that could outcompete the firm in their respective markets.

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News

Trading Information

Previous Close Price
$237.60
Day Range
$231.42238.14
52-Week Range
$129.27238.37
Bid/Ask
$235.83 / $236.05
Market Cap
$195.29 Bil
Volume/Avg
1.4 Mil / 4.9 Mil

Key Statistics

Price/Earnings (Normalized)
27.91
Price/Sales
7.29
Dividend Yield (Trailing)
0.57%
Dividend Yield (Forward)
0.67%
Total Yield
1.86%

Company Profile

Applied Materials is the largest semiconductor wafer fabrication equipment, or WFE, manufacturer in the world. Applied Materials has a broad portfolio spanning nearly every corner of the WFE ecosystem. Specifically, Applied Materials holds a market share leadership position in deposition, which entails the layering of new materials on semiconductor wafers. It is more exposed to general-purpose logic chips made at integrated device manufacturers and foundries. It counts the largest chipmakers in the world as customers, including TSMC, Intel, and Samsung.
Sector
Technology
Industry
Semiconductor Equipment & Materials
Stock Style Box
Large Core
Total Number of Employees
34,000

Competitors

Valuation

Metric
AMAT
KLAC
LRCX
Price/Earnings (Normalized)
27.9136.6935.57
Price/Book Value
10.4636.0316.29
Price/Sales
7.2911.799.32
Price/Cash Flow
24.5533.2132.13
Price/Earnings
AMAT
KLAC
LRCX

Financial Strength

Metric
AMAT
KLAC
LRCX
Quick Ratio
1.821.361.78
Current Ratio
2.802.142.82
Interest Coverage
32.4210.7621.65
Quick Ratio
AMAT
KLAC
LRCX

Profitability

Metric
AMAT
KLAC
LRCX
Return on Assets (Normalized)
22.48%21.67%20.40%
Return on Equity (Normalized)
42.56%104.66%46.70%
Return on Invested Capital (Normalized)
28.55%35.79%28.62%
Return on Assets
AMAT
KLAC
LRCX
See how this stock stacks up to its competitors with Morningstar Investor

Semiconductor Equipment & Materials Industry Comparables

1-Day Chart
Name
Price
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
ASML Holding NV
ASMLF
ZhznbbclqNhbj$409.7 Bil
ASML Holding NV ADR
ASML
VcrjzxfnxFqq$407.4 Bil
Lam Research Corp
LRCX
BmsyfsphPbxy$130.7 Bil
KLA Corp
KLAC
JrsvvwbssNdv$107.5 Bil
Tokyo Electron Ltd
TOELF
Yzwp$104.8 Bil
Tokyo Electron Ltd ADR
TOELY
Bxq$104.8 Bil
Disco Corp ADR
DSCSY
Mkhd$41.7 Bil
Disco Corp
DISPF
Sfvc$41.7 Bil
Teradyne Inc
TER
NsjmssqkvZpyz$23.2 Bil

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