Applied Materials, Inc. (AMAT) Stock Valuation — PE Analysis
Semiconductors · NASDAQ
Current Price
$694.64
PE Ratio (TTM)
65.0x
Intrinsic Value
$898.26
+22.7% margin of safety
COMPETITIVE MOAT
↑Deep R&D and IP
Applied Materials invests heavily in research and development, creating a vast intellectual property portfolio. This allows them to offer highly specialized and proprietary equipment essential for advanced chip manufacturing.
↑Customer Integration and Switching Costs
Their equipment is deeply integrated into customer fabrication processes, making it costly and time-consuming for chipmakers to switch to competitors. This creates significant customer stickiness.
↑Scale and Market Leadership
As a leading supplier of semiconductor manufacturing equipment, AMAT benefits from economies of scale. Their established market position and broad product portfolio are difficult for smaller rivals to replicate.
INVESTMENT RISKS
↓Geopolitical and Trade Tensions
Global trade disputes and export restrictions, particularly concerning advanced chip technology, can significantly impact AMAT's sales and access to key markets. This creates uncertainty in revenue streams.
↓Cyclical Semiconductor Industry
The semiconductor industry is inherently cyclical, with periods of high demand followed by downturns. This volatility can lead to fluctuating revenue and profitability for AMAT.
↓Intense Competition and Innovation Pace
While AMAT has strong moats, the semiconductor equipment industry is highly competitive. Rapid technological advancements by rivals could erode their market share if they fail to innovate quickly.
Base case
AMAT base case PE valuation
A base case PE valuation for AMAT estimates a fair value of about $898.26 per share, against a current price of $694.64. The model assumes 20.0% annual earnings growth, a 50x target PE multiple, and a 10% discount rate.
Intrinsic Value
$898.26
Margin of safety
+22.7%
Expected annual return
+5.3%
Base case assumptions: 20.0% annual earnings growth, 50x target PE, 10% discount rate, 5 year projection. Data as of 2026-06-29.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the AMAT PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for Applied Materials, Inc. respond.
Open PE Calculator for AMATCompany Overview
Applied Materials, Inc. engages in provision of materials engineering solutions used to produce semiconductors. The firm also focuses on design, development, production, and servicing of the critical wafer fabrication tools used for customers to manufacture semiconductors. It operates through the following segments: Semiconductor Systems and Applied Global Services (AGS). The Semiconductor Systems segment includes designing, development, manufacturing and sale of equipment used to fabricate semiconductor chips referred to as integrated circuits. The AGS segment engages in provision of services, spares, and factory automation software to customer fabrication plants globally. The company was founded on November 10, 1967 and is headquartered in Santa Clara, CA.
Financial Metrics — AMAT PE Stock Valuation Data
PE Ratio (TTM)
65.0x
PEG Ratio
2.22
Earnings Yield
1.54%
ROE (TTM)
39.8%
Revenue/Share (TTM)
$36.55
Dividend Yield
0.27%
Debt/Equity
0.27x
Frequently Asked Questions
What is the PE ratio of AMAT?
The trailing twelve-month PE ratio of AMAT reflects how much investors pay per dollar of Applied Materials, Inc.'s earnings. This metric is most useful when compared to Semiconductors peers and the company's own historical range.
Is AMAT overvalued based on PE ratio?
AMAT's PE of 65.0x combined with a PEG ratio of 2.22 provides a growth-adjusted perspective. A PEG above 2.0 suggests AMAT may be richly valued even accounting for growth. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Semiconductors, a DCF analysis may be more appropriate.
How do I value AMAT stock using PE ratio?
To value Applied Materials, Inc. using PE: (1) Compare the current PE (65.0x) against the Semiconductors median to assess relative pricing, (2) check the PEG ratio (2.22) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of AMAT?
AMAT's PEG ratio is 2.22, calculated by dividing the PE ratio (65.0x) by the expected earnings growth rate. A PEG above 2.0 often signals the stock is priced aggressively relative to its growth trajectory. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for AMAT stock valuation?
PE ratio gives a quick relative read — how AMAT is priced versus Semiconductors peers. DCF provides an absolute value based on projected free cash flows. For AMAT, with a strong ROE of 39.8%, both methods are worth using — PE for a market-relative check, DCF to stress-test whether fundamentals justify the price. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See AMAT DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Technology valuationsP/E and DCF value AMAT with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2026-06-29. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.