AMAT

We rate APPLIED MATERIALS INC /DE (AMAT) as a Buy with a composite score of 74.7/100 at a current price of $377.05. The stock scores above average across the majority of our six quantitative factors and ranks #15 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in value (87th percentile) and quality (85th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (36th percentile) and stability (59th percentile) tempers our overall conviction. We assign a Wide Moat rating (72/100), High uncertainty, and Exemplary capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

APPLIED MATERIALS INC /DE holds a top-quartile position (#5 of 50) within the Manufacturing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 74.7/100 places it at rank #15 in our full 7,333-stock universe. With a $181.9B market capitalization, APPLIED MATERIALS INC /DE operates at meaningful scale within the Manufacturing sector, providing competitive advantages in distribution, procurement, and customer reach.

The outlook is moderately positive, with revenue expanding at 3% and favorable momentum (84th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 49% (+6.4pp vs sector) narrow to operating margins of 29% (+28.1pp vs sector) and net margins of 25.0%, yielding a gross-to-net conversion rate of 51%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $377.05, APPLIED MATERIALS INC /DE appears undervalued relative to its fundamentals. Our value factor score of 87/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 41.8x (a 88% premium to the sector median of 22.3x), EV/EBITDA of 33.6x (at a premium), P/B of 13.7x, P/S of 10.4x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a High uncertainty rating to APPLIED MATERIALS INC /DE. Key risk factors include elevated market sensitivity (beta of 1.65), elevated valuation multiple (P/E 41.8x) that leaves limited margin for error. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.65); elevated valuation multiple (P/E 41.8x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 59th percentile and quality factor at the 85th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 49% provide a buffer against cost pressures; large-cap scale ($181.9B) provides resilience. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate APPLIED MATERIALS INC /DE's capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 32.8%, best-in-class net margins of 25.0%. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — APPLIED MATERIALS INC /DE meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. The company returns capital via a 0.75% dividend yield, and the combination of 18.9% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, APPLIED MATERIALS INC /DE receives a Buy rating with a composite score of 74.7/100 (rank #15 of 7,333). Our quantitative framework assigns a Wide Moat (72/100, trend: stable), High uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 70/100.

Our analysis supports a constructive view on APPLIED MATERIALS INC /DE. The combination of a wide competitive moat, high uncertainty, and exemplary capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.