Key Takeaways
- Applied Materials stock is up 73% in the past year on record AI-driven results, though it’s 46% below its June 30 high.
- Investors are paying far less for the same growth, and at 22x forward earnings, the stock looks like a buy.
- Its forward P/E has fallen from 49x at the peak to near its five-year average, while fiscal 2027 EPS estimates rose 13% after June.
- The Nov. 12 report will test whether fiscal 2027 growth stays on track.
Applied Materials (AMAT) is up 73% in the past year (through Tuesday’s close), as AI chipmakers spent record sums on its tools. That beats the 58% gain for ASML (ASML) over the same stretch.
But it’s 46% below its June 30 high after a rough October: an investor day with no industry forecast, then a supply-constrained outlook from Lam Research (LRCX) that revived worries about chip spending.
So is it time to take profits, or buy more?
Record after record
The business has set records all year. On May 14, Applied reported record fiscal second-quarter revenue of $7.91 billion and said it now expected its chip-equipment business to grow more than 30% in calendar 2026.
As CFO Brice Hill put it: “The growth in AI that Applied has been investing for is now in full force.”
The fiscal third quarter, reported Aug. 13, was even better…
- Revenue rose 25% from a year earlier to a record $9.12 billion.
- Non-GAAP EPS rose 41% to a record $3.50.
- Non-GAAP gross margin reached 50.4%, the 13th straight quarter of year-over-year gains.
Applied raised its 2026 equipment outlook again, and CEO Gary Dickerson looked further out: “Based on the increased demand visibility we are receiving from our customers, we expect another strong growth year for Applied Materials in 2027.”
TIKR tracks 40 analysts on Applied Materials. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Applied Materials, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Applied Materials’ Analyst Ratings
Investors now pay less than half as much
So why has the stock nearly halved? Investors decided to pay less for the same growth.
At its Oct. 13 investor breakfast, Applied set 2030 targets of about 54% non-GAAP gross margin and 40% non-GAAP operating margin, but it gave no forecast for wafer fab equipment spending. Then on Oct. 21, Lam guided December-quarter revenue to $8.6 billion, and CFO Doug Bettinger said on Lam’s earnings call the figure “would have been a bit higher if not for some near-term supply chain constraints.” Investors took a timing problem for a demand problem.
The result: Applied’s forward P/E peaked near 49x on June 30 and is down to 22x, right around its five-year average of 21x.
That’s also below the roughly 25x ASML traded at last week.
And the de-rating came as analysts raised their numbers. The consensus for fiscal 2027 EPS is up 13% since the end of June, and Wall Street now expects normalized EPS to climb from $12.79 in fiscal 2026 to $18.49 in fiscal 2027 and $23.69 in fiscal 2028:
Lam’s report gives no reason to cut them: it still expects industry equipment spending to top $200 billion in 2027.
What’s next: Nov. 12
Applied reports fiscal fourth-quarter results on Nov. 12. It guided to revenue of $10.25 billion, plus or minus $500 million, and non-GAAP EPS of $4.02, plus or minus $0.20; Wall Street expects $10.30 billion and $4.06.
The January-quarter guide matters more. It covers 14 weeks instead of 13, which will flatter the headline figure. What counts is whether the weekly pace keeps rising, and whether fiscal 2027 still points to the $46.4 billion of revenue analysts expect, up 35% from fiscal 2026.
The main risk is China, 30% of fiscal 2025 revenue, where export rules and a turn to local tools could keep eating into sales.
At 22x, I’d buy more
My take: I’d skip the profit-taking and add shares here. At 22x, the price asks only for the growth analysts already expect, and those estimates are still rising. Wall Street’s mean price target of $628 sits about 59% above Tuesday’s close.
Of course, a weak January-quarter guide or a cut to that 2027 outlook on Nov. 12 would undo the case in a hurry.
So what is Applied Materials stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
