APPLIED MATERIALS INC /DE (AMAT) — Fundamental Analysis

Applied Materials is one of the world's dominant suppliers of semiconductor manufacturing equipment, and its financials tell a story of a business that has grown substantially, generates exceptional profits, and carries a healthy balance sheet. Revenue has climbed from $17.2 billion in fiscal 2020 to $28.4 billion in fiscal 2025, margins have steadily improved, and the most recent quarter (ending July 2026) shows gross margins cracking above 50% for the first time in the data set — a milestone that signals real pricing power and operational leverage. Debt is modest relative to equity and continues to fall, the current ratio is comfortably above 2x, and while capital expenditures spiked in fiscal 2025 and the latest quarter, this appears to reflect deliberate investment in capacity rather than a sign of distress. In short, Applied Materials looks like a financially strong, highly profitable business riding the long-term secular demand for advanced chipmaking equipment.

Snapshot & Big Picture

Applied Materials designs and sells the equipment, services, and software that chipmakers use to manufacture semiconductors, displays, and solar panels. Its customers include the largest foundries and integrated device manufacturers in the world — companies like TSMC, Samsung, and Intel — whose multi-year capital spending plans translate directly into demand for AMAT's tools. This creates a business that is cyclical at the edges but structurally growing as chips become more complex and more pervasive. The numbers below reflect that dynamic: revenue growth has been strong over five years, margins have expanded, and the balance sheet has de-leveraged meaningfully.

Latest Quarter Snapshot

The most recent data comes from the 10-Q for the quarter ending July 26, 2026 — more current than the annual figures above — and it is notably strong. Quarterly revenue reached $9.1 billion, and gross margin climbed to 50.3%, a new high in this data set. Operating margin hit 33.7% and net margin came in at 27.8%, both well above the recent annual averages. The current ratio stands at 2.42x and the debt-to-equity ratio has compressed further to 0.25, reflecting continued balance sheet improvement. Capital expenditures for the quarter were $646 million, representing about 7.1% of revenue — elevated relative to the recent annual average but consistent with the heavier investment posture seen in fiscal 2025.

Profitability

Applied Materials' profitability trend over the past several years is one of steady, meaningful improvement. Gross margin has risen from the low-to-mid 44% range in fiscal 2018–2020 to nearly 49% in fiscal 2025, and has now crossed 50% in the most recent quarter. This expansion reflects a more favorable product mix, pricing discipline, and growing services revenue — which tends to carry higher margins than equipment sales alone.

Operating margins dipped slightly in fiscal 2023 and 2024 compared to the fiscal 2022 peak of 30.2%, but have recovered. Net margins followed a similar trajectory, ranging from the low 18% area in fiscal 2018–2019 (a period that included a revenue trough in 2019) to a recent range of 24–26%. The EBITDA trend is also encouraging: from $3.7B in fiscal 2019 to $8.7B in fiscal 2025, nearly doubling over six years. The latest quarterly run rate, if annualized, would place EBITDA well above the fiscal 2025 full-year figure, suggesting continued momentum.

Financial Health

Applied Materials carries a conservative balance sheet for a company of its scale. The debt-to-equity ratio has fallen from 0.78 in fiscal 2018 to 0.32 in fiscal 2025, and further to 0.25 in the most recent quarter — a consistent de-leveraging trend that indicates the company is generating more than enough cash to fund operations, investments, and shareholder returns without leaning on debt. The current ratio has remained comfortably above 2x throughout the entire period, suggesting ample liquidity to meet near-term obligations.

Capital Expenditures: This is an area worth watching. For most of the period, capex was relatively modest — running between roughly 2.5% and 4.2% of revenue from fiscal 2019 through fiscal 2024. That changed notably in fiscal 2025, when capex jumped to $2.26 billion, or about 8.0% of revenue, up sharply from $1.19 billion (4.4% of revenue) in fiscal 2024. The most recent quarter sustained this elevated intensity at $646 million, or 7.1% of revenue. This step-up suggests Applied Materials is investing meaningfully in its own manufacturing and R&D infrastructure to support next-generation product development and likely to reduce exposure to supply chain constraints. Whether this represents a durable shift in capital intensity or a multi-year investment cycle that will moderate is worth monitoring in future filings.

Growth

The table below shows Applied Materials' revenue compound annual growth rates over the available windows. The 10-year CAGR is not available because the SEC filing history in the data provided does not extend back far enough to compute a full 10-year window from this data set.

The contrast between the 3-year CAGR of 3.2% and the 5-year CAGR of 10.5% reflects the reality of the semiconductor equipment cycle: fiscal 2020 was a particularly strong growth inflection year, followed by explosive expansion through 2022, after which growth has moderated as the industry digests prior capacity additions. The most recent quarterly revenue run rate — $9.1 billion in a single quarter — suggests the pace of growth may be reaccelerating, which would be consistent with a new upcycle in semiconductor capital spending driven by AI infrastructure buildout.

Source Filings

• 10-Q filed August 20, 2026 — Quarter ending July 26, 2026
• 10-Q filed May 21, 2026 — Quarter ending April 26, 2026