MMarketMath

AMAT

StalwartQuality: High (100/100)1 red flag

Applied Materials · Information Technology · Semiconductor Materials & Equipment

$484.19

52w 154.47 – 739.67

20y monthly, adjusted

Mkt cap

$384.3B

P/E

55.9

P/FCF

68.6

FCF yield

1.5%

ROE

34.3%

Shldr yield

1.6%

div 0.4% + bb 1.3%

What today's price assumes

At $384.3B, the market is pricing in 24.6% annual free-cash-flow growth for the next decade (10% discount rate, 2.5% terminal growth). Over the last ten years, FCF actually grew 19.6% per year — the price asks for acceleration beyond the historical record.

Simple DCF per-share range: $109 · $245 · $354 (4% / base / optimistic growth). An estimate, not a target.

Adjust the assumptions yourself →

Historical multiple lens

At its own median P/OCF of 14.3× across 19 years, AMAT would trade near $143/share (25th–75th percentile: $92–$184); it trades at 48.3× today.

Assumes the historical multiple regime persists — re-ratings can be permanent.

Growth record

Compound annual growth rates from as-filed 10-K data, split-adjusted

Rev 3y

+3.2%

Rev 5y

+10.5%

Rev 10y

+11.4%

EPS 5y

+17.2%

EPS 10y

+22.7%

FCF 5y

+11.0%

FCF 10y

+19.6%

Fundamentals

Fiscal 2007–2025, from SEC filings

Revenue

2007: $9.7B
2008: $8.1B
2009: $5.0B
2010: $9.5B
2011: $10.5B
2012: $8.7B
2013: $7.5B
2014: $9.1B
2015: $9.7B
2016: $10.8B
2017: $14.7B
2018: $16.7B
2019: $14.6B
2020: $17.2B
2021: $23.1B
2022: $25.8B
2023: $26.5B
2024: $27.2B
2025: $28.4B
$0$10.0B$20.0B
07
11
15
19
23

Net income

2007: $1.7B
2008: $960.7M
2009: −$305.0M
2010: $938.0M
2011: $1.9B
2012: $109.0M
2013: $256.0M
2014: $1.1B
2015: $1.4B
2016: $1.7B
2017: $3.5B
2018: $3.0B
2019: $2.7B
2020: $3.6B
2021: $5.9B
2022: $6.5B
2023: $6.9B
2024: $7.2B
2025: $7.0B
$0$2.0B$4.0B$6.0B
07
11
15
19
23

Free cash flow

2007: $1.9B
2008: $1.4B
2009: $84.0M
2010: $1.6B
2011: $2.2B
2012: $1.7B
2013: $426.0M
2014: $1.6B
2015: $948.0M
2016: $2.3B
2017: $3.4B
2018: $3.2B
2019: $2.8B
2020: $3.4B
2021: $4.8B
2022: $4.6B
2023: $7.6B
2024: $7.5B
2025: $5.7B
$0$2.0B$4.0B$6.0B
07
11
15
19
23

Diluted shares (lower is better)

2007: 1.4B
2008: 1.4B
2009: 1.3B
2010: 1.3B
2011: 1.3B
2012: 1.3B
2013: 1.2B
2014: 1.2B
2015: 1.2B
2016: 1.1B
2017: 1.1B
2018: 1.0B
2019: 945.0M
2020: 923.0M
2021: 919.0M
2022: 877.0M
2023: 845.0M
2024: 834.0M
2025: 808.0M
0500.0M1.0B
07
11
15
19
23

Margins

0%20%40%07101316192225
Net marginFCF marginGross margin

Capital returned (dividends + buybacks)

2007: $1.6B
2008: $1.8B
2009: $342.0M
2010: $699.0M
2011: $865.0M
2012: $1.9B
2013: $701.0M
2014: $485.0M
2015: $1.8B
2016: $2.3B
2017: $1.6B
2018: $5.9B
2019: $3.2B
2020: $1.4B
2021: $4.6B
2022: $7.0B
2023: $3.2B
2024: $5.0B
2025: $6.3B
$0$2.0B$4.0B$6.0B
07
11
15
19
23

Cash vs long-term debt

$0$2.5B$5.0B$7.5B07101316192225
CashLT debt

Quarterly

Discrete quarters from 10-Q filings; Q4 derived as fiscal year minus Q1–Q3. OCF is unwound from the year-to-date figures 10-Qs report. Compare to the same quarter a year ago — most businesses are seasonal.

Revenue by quarter

Q3'23: $6.4B
Q4'23: $6.7B
Q1'24: $6.7B
Q2'24: $6.6B
Q3'24: $6.8B
Q4'24: $7.0B
Q1'25: $7.2B
Q2'25: $7.1B
Q3'25: $7.3B
Q4'25: $6.8B
Q1'26: $7.0B
Q2'26: $7.9B
Q3'26: $9.1B
$0$2.5B$5.0B$7.5B
23
24
25
25
26

Net income by quarter

Q3'23: $1.6B
Q4'23: $2.0B
Q1'24: $2.0B
Q2'24: $1.7B
Q3'24: $1.7B
Q4'24: $1.7B
Q1'25: $1.2B
Q2'25: $2.1B
Q3'25: $1.8B
Q4'25: $1.9B
Q1'26: $2.0B
Q2'26: $2.8B
Q3'26: $2.5B
$0$1.0B$2.0B
23
24
25
25
26
QuarterRevenueYoYNet incomeYoYEPSOCF
Q3'26$9.1B+24.8%$2.5B+42.7%3.17$3.0B
Q2'26$7.9B+11.4%$2.8B+31.3%3.51$845.0M
Q1'26$7.0B−2.1%$2.0B+71.0%2.54$1.7B
Q4'25 *$6.8B−3.5%$1.9B+9.6%2.36$2.8B
Q3'25$7.3B+7.7%$1.8B+4.3%2.22$2.6B
Q2'25$7.1B+6.8%$2.1B+24.1%2.63$1.6B
Q1'25$7.2B+6.8%$1.2B−41.3%1.45$925.0M
Q4'24 *$7.0B+4.8%$1.7B−13.6%2.09$2.6B
Q3'24$6.8B+5.5%$1.7B+9.3%2.05$2.4B
Q2'24$6.6B+0.2%$1.7B+9.3%2.06$1.4B
Q1'24$6.7B−0.5%$2.0B+17.6%2.41$2.3B
Q4'23 *$6.7B−0.4%$2.0B+26.0%2.38$1.6B
Q3'23$6.4B−1.5%$1.6B−2.9%1.85$2.6B

Track record

Compound annual growth by period. For debt and share count, negative is the good direction.

Series3y5y10y15y
Revenue+3.2%+10.5%+11.4%+7.5%
Operating cash flow+13.8%+15.9%+21.2%+10.7%
Free cash flow+7.3%+11.0%+19.6%+9.0%
EPS (diluted)+5.2%+17.2%+22.7%+18.3%
Equity+18.7%+14.1%+10.4%+6.9%
LT debt+5.8%+3.5%+6.8%+25.9%
Diluted shares−2.7%−2.6%−4.1%−3.4%
Stock price+48.0%+30.1%+33.5%+30.4%

$100, 3 years ago

$324vs $176 in SPY

48.0% vs 20.7%/yr

$100, 5 years ago

$373vs $181 in SPY

30.1% vs 12.6%/yr

$100, 10 years ago

$1,803vs $412 in SPY

33.5% vs 15.2%/yr

$100, 15 years ago

$5,344vs $813 in SPY

30.4% vs 15.0%/yr

The $1 test — market value created per $1 of earnings retained (Buffett's hurdle: at least $1)

Last 5 years

$4.63

$130.6B created / $28.2B retained

Last 10 years

$4.60

$182.9B created / $39.7B retained

Quality & capital discipline

Cash-based returns and how management deploys capital

Cash ROIC

29.6%

OCF ÷ (equity + debt)

OCF / EV yield

2.0%

MC vs 10× OCF

4.91

≤1 = priced under 10× OCF

Debt / FCF

1.1y

SBC / FCF

11.7%

Owner earnings

$5.0B

OCF − capex − SBC

OE yield

1.3%

Share count 5y

−3.1%

per year; negative = buybacks

Capital intensity

16.3%

net PP&E ÷ revenue

Sales efficiency

$0.27

new PP&E per $1 new revenue, 5y

Growth engine (5y): reinvested 24.8% of operating cash flow at an incremental return of 46.4% — an organically fundable growth rate of about 11.5% per year (growth ≈ reinvestment rate × incremental ROIC).

Checklist

22 of 27 checks pass · 81%. Checks with structurally missing inputs are excluded.

Growth & Consistency

7/7

  • Revenue growth

    10.5% · 5y CAGR ≥ 5%

    pass

  • EPS growth

    17.2% · 5y CAGR ≥ 5%

    pass

  • FCF growth

    11.0% · 5y CAGR ≥ 5%

    pass

  • Revenue rises consistently

    8 of 9 · up in ≥ 7 of last 10 years

    pass

  • FCF consistently positive

    10 of 10 · positive in ≥ 8 of last 10 years

    pass

  • Profitable every year

    10 of 10 · net income > 0 in ≥ 8 of last 10

    pass

  • Cash flow keeps up with sales

    15.9% vs 10.5% · OCF CAGR ≥ 0.9× revenue CAGR

    pass

Profitability

7/7

  • Net margin

    24.7% · ≥ 8%

    pass

  • Operating margin

    29.2% · ≥ 10%

    pass

  • Gross margin stable or rising

    48.7% vs 46.5% · no drop > 2 pts over 3y

    pass

  • Return on equity

    34.3% · ≥ 12%

    pass

  • Cash ROIC

    29.6% · ≥ 12%

    pass

  • FCF margin

    20.1% · ≥ 5%

    pass

  • Earnings back their cash

    OCF $8.0B vs NI $7.0B · OCF ≥ net income (latest FY)

    pass

Balance Sheet

5/5

  • Debt payable from cash flow

    1.1y · LT debt ≤ 3× FCF

    pass

  • Cash cushion

    112% · cash ≥ 50% of LT debt

    pass

  • Leverage

    0.32 · LT debt ≤ 1.5× equity

    pass

  • Equity positive and compounding

    $20.4B · equity > 0 and grew over ~5y

    pass

  • Interest burden

    3% · interest ≤ 15% of operating income

    pass

Capital Allocation

3/4

  • Share count flat or shrinking

    -3.1% · ≤ +0.5%/yr over ~5y

    pass

  • Stock comp restrained

    12% · SBC ≤ 15% of FCF

    pass

  • Distributions funded by FCF

    110% · dividends + buybacks ≤ 100% of FCF

    fail

  • Repurchases are a habit

    10 of 10 · buybacks in ≥ 5 of last 10 years

    pass

Valuation Discipline

0/4

  • FCF yield

    1.5% · ≥ 3%

    fail

  • Earnings multiple

    55.9 · P/E ≤ 25

    fail

  • Price asks less than history delivered

    24.6% vs 19.6% · implied FCF growth ≤ historical FCF CAGR

    fail

  • Shareholder yield

    1.6% · dividends + buybacks ≥ 2% of market cap

    fail

Red flags

Mechanical checks — a flag is a question to investigate, not a verdict

Distributions exceed FCF

Dividends plus buybacks exceeded free cash flow in the latest fiscal year.

Financial data

As filed in 10-Ks; per-share figures split-adjusted. $ in millions.

FYRevenueGross profitOp incomeNet incomeEPSOCFCapExFCFDividendsBuybacksSBCCashLT debtEquityShares
202528,36813,8088,2896,9988.667,9582,2605,6981,3844,8956687,2416,45520,415808
202427,17612,8977,8677,1778.618,6771,1907,4871,1923,8235778,0225,46019,001834
202326,51712,3847,6546,8568.118,7001,1067,5949752,1894906,1325,46116,349845
202225,78511,9937,7886,5257.445,3997874,6128736,1034131,9955,45712,194877
202123,06310,9146,8895,8886.405,4426684,7748383,7503464,9955,45212,247919
202017,2027,6924,3653,6193.923,8044223,3827876493075,3515,44810,578923
201914,6086,3863,3502,7062.863,2474412,8067712,4032633,1294,7138,214945
201816,7057,5174,4913,0382.963,7876223,1656055,2832583,4405,3096,8451,026
201714,6986,6123,9363,5193.253,7893453,4444301,1722205,0105,3049,6301,084
201610,8254,5112,1521,7211.542,5662532,3134441,8922013,4063,1257,4131,116
20159,6593,9521,6931,3771.121,1632159484871,3251874,7973,3427,6131,226
20149,0723,8431,5201,0720.871,8002411,55948501773,0021,9477,8681,231
20137,5092,9914322560.216231974264562451621,7111,9467,0881,219
20128,7193,3134111090.091,8511621,6894341,4161821,3921,9467,2351,277
201110,5174,3602,3981,9261.452,4292092,2203974681465,9601,9478,8001,330
20109,5493,7151,3849380.701,7231691,5543493501261,8582047,5361,349
20095,0141,431-394-305-0.2333324984319231471,5762017,0941,333
20088,1293,4431,3559610.701,7102881,4233251,5001791,4112027,5491,375
20079,7354,4922,3721,7101.202,2092651,9453061,3321611,203—7,8211,427

Some concepts are structurally absent for certain industries (banks report no gross profit or capex). Missing ≠ zero.

Compare with peers →·10-K filings on EDGAR ↗