About APPLIED MATERIALS INC
Applied Materials, Inc. provides manufacturing equipment, services, and software to the semiconductor, display, and related industries. It operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. The Semiconductor Systems segment develops, manufactures, and sells various manufacturing equipment that is used to fabricate semiconductor chips or integrated circuits. This segment also offers various technologies, including epitaxy, ion implantation, oxidation/nitridation, rapid thermal processing, physical vapor deposition, chemical vapor deposition, chemical mechanical planarization, electrochemical deposition, atomic layer deposition, etching, and selective deposition and removal, as well as metrology and inspection tools.
The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity comprising spares, upgrades, services, remanufactured earlier generation equipment, and factory automation software for semiconductor, display, and other products. The Display and Adjacent Markets segment offers products for manufacturing liquid crystal displays; organic light-emitting diodes; and other display technologies for TVs, monitors, laptops, personal computers, electronic tablets, smart phones, and other consumer-oriented devices. The company operates in the United States, China, Korea, Taiwan, Japan, Southeast Asia, and Europe. Applied Materials, Inc. was incorporated in 1967 and is headquartered in Santa Clara, California.
AMAT operates in the Manufacturing | Electronic Equipment | headquartered in Wilmington, California | approximately 33,000 employees | led by CEO Gary E. Dickerson.
The $181.9B question: What happens when a company this good becomes this expensive?
In the rarefied air of Silicon Valley valuations, APPLIED MATERIALS INC /DE sits at a peculiar crossroads. The company that once defined an era now finds itself redefining another — and investors are paying a premium for the privilege of coming along.
At $181.9B in market capitalization, APPLIED MATERIALS INC /DE (AMAT) currently ranks #201 in our quantitative model, with a composite score of 76.4/100. That places it firmly in "Strong Buy" territory — our highest conviction rating.
But here's the thing about stocks priced for perfection: They leave no room for error.
The Numbers That Matter
Let's start with what's undeniably true. Our 6-factor model gives AMAT the following scores:
| Factor | Score | Weight | Assessment |
|---|---|---|---|
| Quality | 91/100 | 30% | Exceptional |
| Value | 78/100 | 15% | Fair |
| Momentum | 73/100 | 25% | Accelerating |
| Investment | 32/100 | 10% | Low |
| Stability | 41/100 | 10% | Volatile |
| Short Interest | 57/100 | 10% | Normal |
The quality score of 91/100 is the headline here. It reflects profitability metrics that would make most CFOs weep with envy:
- ROE: 32.7%
- Net Margin: 27.9%
- Gross Margin: 48.0%
These aren't just good numbers. They're the kind of numbers that make AMAT a "must-own" stock for institutional portfolios.
The Bull Case
"If you could design a business in a laboratory, it would look something like AMAT."
The bull case writes itself:
- Quality is persistent. Academic research shows high-quality stocks outperform by 4-6% annually over long periods. AMAT is quality defined.
- Momentum is real. With a momentum score of 73/100, the stock has been recognized by the market — and momentum tends to persist.
- The moat is deep. Companies with these margins don't lose them easily. The competitive position is entrenched.
The Bear Case
But here's what keeps value investors up at night:
- Valuation compression risk. At current levels, the stock is priced for continued perfection. Any stumble — a missed quarter, a competitive threat, a macro slowdown — could compress the multiple from 26.0x to the low 20s. That's a 20-30% decline without anything fundamentally "wrong."
- The crowded trade problem. When everyone owns a stock, who's left to buy? Momentum works until it doesn't.
- Mean reversion. Trees don't grow to the sky. At some point, growth decelerates.
The Valuation Framework
| Scenario | Assumption | Fair Value | Upside/Downside |
|---|---|---|---|
| Bear | Multiple compression to 20x | -20% | Downside |
| Base | Current trajectory continues | +10-15% | Modest upside |
| Bull | Momentum accelerates | +30-40% | Significant upside |
The risk-reward is ... fine. Not exceptional. Not terrible. Just fine.
The Bottom Line
APPLIED MATERIALS INC /DE is exactly what it appears to be: a high-quality business with strong momentum trading at a premium price. Whether that's attractive depends entirely on what kind of investor you are.
For long-term, buy-and-hold investors, AMAT is a core holding. For value investors or short-term traders, look elsewhere.
The company is priced for perfection — and in markets, as in life, perfection is a fragile thing.
⭐⭐⭐⭐⭐ Rating: 5-Star Strong Buy
Score: 76.4/100 | Rank: #201 of 3,571 stocks
Sector: Technology
This analysis reflects the views of Blank Capital Research as of February 16, 2026. It is not investment advice. Past performance does not guarantee future results.
