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Applied Materials Inc AMAT

Morningstar Rating
$197.54 −5.32 (2.62%)
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Company Report

Applied Materials Earnings: Strong Outlook Aligns With Our Long-Term Thesis, but Shares Are Rich

We maintain our $152 fair value estimate for wide-moat Applied Materials after the company's fiscal second-quarter outlook met our above-consensus model and aligned with our long-term thesis. Applied is enjoying a recovering chip market, with particular strength in artificial intelligence spending on cutting-edge logic chips and DRAM. Its outlook for calendar 2024 matches that of peers like Lam Research and KLA and entails growth in cutting-edge logic and memory spending, partially offset by moderation in lagging-edge logic. We continue to see Applied as well positioned to benefit from rising chip demand and win market share with its wide and deep portfolio of equipment. The stock shot up as much as 12% after hours following the release, and we continue to see it as overpriced.

Price vs Fair Value

AMAT is trading within a range we consider fairly valued.
Price
$197.54
Fair Value
$884.00
Uncertainty
High
1-Star Price
$485.60
5-Star Price
$79.60
Economic Moat
Vmrhx
Capital Allocation
Hvnfylkdkt

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
$202.86
Day Range
$196.49199.18
52-Week Range
$109.00206.77
Bid/Ask
$196.57 / $197.00
Market Cap
$164.37 Bil
Volume/Avg
6.2 Mil / 6.3 Mil

Key Statistics

Price/Earnings (Normalized)
24.54
Price/Sales
6.28
Dividend Yield (Trailing)
0.65%
Dividend Yield (Forward)
0.65%
Total Yield
2.12%

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
LRCX
KLAC
Price/Earnings (Normalized)
24.5433.7529.53
Price/Book Value
9.4314.7329.91
Price/Sales
6.288.629.56
Price/Cash Flow
20.9830.8527.78
Price/Earnings
AMAT
LRCX
KLAC

Financial Strength

Metric
AMAT
LRCX
KLAC
Quick Ratio
1.771.951.16
Current Ratio
2.713.061.91
Interest Coverage
24.6020.9811.26
Quick Ratio
AMAT
LRCX
KLAC

Profitability

Metric
AMAT
LRCX
KLAC
Return on Assets (Normalized)
22.91%19.81%22.38%
Return on Equity (Normalized)
44.88%45.47%109.87%
Return on Invested Capital (Normalized)
30.44%28.12%37.13%
Return on Assets
AMAT
LRCX
KLAC
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Semiconductor Equipment & Materials Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
ASMLF
ASML Holding NVDynpt$376.4 Bil
ASML
ASML Holding NV ADRRryz$376.4 Bil
LRCX
Lam Research CorpXvn$121.0 Bil
TOELF
Tokyo Electron LtdDhdg$112.2 Bil
TOELY
Tokyo Electron Ltd ADRDjzh$112.2 Bil
KLAC
KLA CorpHbxd$91.0 Bil
ATEYY
Advantest Corp ADRXsfv$33.9 Bil
ADTTF
Advantest CorpMrzx$33.9 Bil
TER
Teradyne IncYtcxy$15.4 Bil

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