Applied Materials
| CURRENT PRICE | PROBABILITY-WEIGHTED FAIR VALUE | FAIR VALUE RANGE |
|---|---|---|
| $400 | ~$440 | $320 – $565 |
| May 2026 | Bull 25% / Base 50% / Bear 25% | ~10% upside; consensus PT $510 |
Verdict: AMAT delivered record Q2 FY26 revenue of $7.91B (+11.4% YoY) with EPS beat ($2.86 vs. $2.68 cons)[1]. The company captures ~19% of global WFE spending and benefits from leading-edge logic (TSMC, Intel, Samsung) plus advanced memory (HBM). At 30x forward P/E with strong AI capex tailwind, valuation is full but not stretched given 25%+ consensus upside to PT of $510[2]. Bull case requires sustained leading-edge capex and HBM expansion; bear case reflects a memory downturn or China export restrictions.
CURRENT SNAPSHOT
| Metric | Value | Notes / Source |
|---|---|---|
| Stock price | $400 | Down 3.2% on May 19 [3] |
| Market cap | $323B | [4] |
| Q2 FY26 revenue | $7.91B (+11.4%) | Record; ahead of guide [1] |
| Q2 FY26 EPS (non-GAAP) | $2.86 | vs. cons $2.68 [1] |
| WFE market share | ~19% | Leading-edge focus [2] |
| Forward P/E | 29.85x | Trailing 41x [4] |
| EV/EBITDA | 37x | [5] |
| Consensus PT | $510 | 39 analysts; Buy [4] |
BULL / BASE / BEAR SCENARIOS
| Scenario (weight) | Assumptions | Fair Value |
|---|---|---|
| Bull (25%) | AI capex extends through 2027, HBM expansion accelerates, China rebound, 33x forward P/E | $565 |
| Base (50%) | Steady WFE growth +10%, multiple holds at 28x forward P/E | $440 |
| Bear (25%) | Memory downturn or China export tightening, multiple compresses to 20x | $320 |
| Probability-weighted | Cycle-led name; AI infrastructure tailwind balanced by China geopolitical overhang. | ~$440 |
Key Risks
- China export controls: US restrictions on advanced node tools to China continue evolving; recent rules carve out exposures.
- Memory cycle: DRAM/NAND spending is highly cyclical; downturn would compress overall WFE.
- Leading-edge concentration: TSMC and Intel dominate spending; pushouts impact AMAT directly.
- Service mix: Recurring services revenue cushions cycle but only ~25% of mix.
What Would Change Our View
- Upside: HBM share gain, GAA tool ramp, China clarity, F2027 capex guidance raises.
- Downside: Major customer pushout, China rule tightening, memory pricing collapse.
Sources
[2] https://simplywall.st/stocks/us/semiconductors/nasdaq-amat/applied-materials/valuation
[3] https://finance.yahoo.com/quote/AMAT/
[4] https://stockanalysis.com/stocks/amat/statistics/
[5] https://www.gurufocus.com/term/enterprise-value-to-ebitda/AMAT
Disclaimer
This output is for informational and research-assistance purposes only. It does not constitute investment, legal, tax, accounting, or other professional advice, and it is not a recommendation to buy, sell, or hold any security. Verify material facts independently and consult qualified advisors before making decisions.