Semiconductors · NASDAQ
Current Price
$382.59
Intrinsic Value
Use the calculator below to estimate
Run a full DCF analysis on Applied Materials, Inc. with auto-filled fundamentals, adjustable assumptions, and sensitivity heatmap.
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.
ROIC (TTM)
22.6%
ROE (TTM)
38.9%
FCF Yield
2.04%
Based on trailing twelve-month data, AMAT shows a free cash flow per share of N/A and a ROIC of 22.6%, key inputs for stock valuation using the DCF method. The P/FCF ratio of N/A and FCF yield of 2.04% are important context metrics when evaluating AMAT's stock valuation relative to peers.
The intrinsic value of AMAT depends on assumptions about future growth rate, discount rate (WACC), and terminal value. A DCF model discounts projected free cash flows back to present value — small changes in WACC can shift the estimate by 20% or more, which is why sensitivity analysis is essential.
Whether AMAT is undervalued depends on comparing the DCF-derived intrinsic value to the current market price of $382.59. A positive margin of safety (intrinsic value above market price) suggests potential undervaluation, but the degree of confidence depends on the reliability of your growth and discount rate assumptions.
To perform a DCF valuation on Applied Materials, Inc.: (1) Start with the trailing free cash flow per share as the base, (2) project future FCF growth over 5-10 years based on Semiconductors industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting AMAT's risk profile, and (4) add a terminal value for cash flows beyond the projection period.
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Applied Materials, Inc., this means projecting how much free cash flow the Semiconductors will produce over the next 5-10 years, then discounting those amounts to today's dollars. AMAT's ROIC of 22.6% indicates strong capital efficiency, which supports higher growth assumptions in the DCF model.
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For AMAT, the capital structure and equity risk premium determine WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%.
