Applied Materials, Inc. (AMAT) Stock Valuation — PE Analysis
Semiconductors · NASDAQ
Current Price
$436.45
PE Ratio (TTM)
40.8x
Intrinsic Value
$697.89
+37.5% margin of safety
COMPETITIVE MOAT
↑Deep R&D and Intellectual Property
AMAT invests heavily in research and development, creating proprietary technologies and patents. This leads to specialized equipment that is difficult for competitors to replicate.
↑Customer Relationships and Switching Costs
Semiconductor manufacturers rely on AMAT's complex, integrated equipment. The high cost and disruption of switching to a new supplier create significant switching costs.
↑Scale and Manufacturing Expertise
AMAT's massive scale allows for efficient manufacturing and supply chain management. This expertise in producing highly complex machinery is a significant barrier to entry.
INVESTMENT RISKS
↓Cyclical Nature of Semiconductor Industry
The semiconductor industry is inherently cyclical, with periods of high demand followed by downturns. This can lead to volatile revenue and earnings for AMAT.
↓Intense Competition and Pricing Pressure
While AMAT has strong moats, it faces intense competition from other equipment manufacturers. This can lead to pricing pressure and reduced profit margins.
↓Dependence on Key Customers
A significant portion of AMAT's revenue comes from a few large semiconductor manufacturers. A slowdown or shift in strategy from these key customers could materially impact AMAT.
Base case
AMAT base case PE valuation
At a current price of $436.45, the base case PE valuation puts AMAT fair value near $697.89 per share. That figure assumes 18.2% yearly earnings growth, a target PE multiple of 41x, and a 10% discount rate.
Intrinsic Value
$697.89
Margin of safety
+37.5%
Expected annual return
+9.8%
Base case assumptions: 18.2% annual earnings growth, 41x target PE, 10% discount rate, 5 year projection. Data as of 2026-07-29.
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)
40.8x
PEG Ratio
1.40
Earnings Yield
2.46%
ROE (TTM)
39.8%
Revenue/Share (TTM)
$36.55
Dividend Yield
0.44%
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 40.8x combined with a PEG ratio of 1.40 provides a growth-adjusted perspective. A PEG near 1.0 means the P/E is roughly in line with the earnings growth rate. 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 (40.8x) against the Semiconductors median to assess relative pricing, (2) check the PEG ratio (1.40) 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 1.40, calculated by dividing the PE ratio (40.8x) by the expected earnings growth rate. A PEG near 1.0 means the P/E is roughly in line with the expected earnings growth rate. 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 2026-07-29. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.