⚡What does Applied Materials do, in 30 seconds?
Applied Materials sells the machines, services and software that chipmakers use to make chips; it does not make chips itself 23. It sold $28.4bn ✓ in FY2025. Chipmaking machines made up 73% ✓ of that, and services 23% ✓.
📱What does Applied Materials sell?
Applied has two main businesses: machines that make chips, and the services that keep those machines running. A small third group covers everything else, such as display equipment.
Semiconductor Systems
The big machines inside chip factories, which brought in FY2025 revenue of $20.8bn ✓. They lay down and shape the tiny layers of a chip, build its wiring, check it for flaws and package finished chips 2.
👥 Chipmakers. In FY2025, foundry, logic and other chipmakers made up 67% of this segment's sales, DRAM memory makers 26% and NAND flash makers 7% 3.
Applied Global Services
Service, spare parts and factory software that keep Applied's machines in customers' plants running, with engineers based near those plants 2. In FY2025, it brought in $6.4bn ✓. Applied wants more of it sold as subscriptions, which it says makes revenue more predictable 3.
👥 Chip factories that already own Applied machines.
How the mix has shifted
Where the customers are
China was Applied's biggest market in FY2025, at 30% ✓ of sales. That was down from 37% in FY2024 3. Taiwan added 24% ✓ and South Korea 20% ✓, while the United States made up 11% ✓. In all, about 89% of sales came from customers outside the United States 12.
💸How does Applied Materials make money?
Follow the money from left to rightfrom top to bottom: what customers pay for, what it costs to make, and what is left as profit.
Applied sold $28.4bn ✓ of machines and services in FY2025. Building those machines and delivering those services cost $14.6bn ✓. What is left is gross profit, the money kept after paying for what was sold. That came to $13.8bn ✓.
Next come the costs of running the company. Research and development took $3.6bn ✓, and sales, marketing and admin took $1.8bn ✓. Other operating costs took $0.2bn ✓. What remains is operating profit, the profit from the main business, which was $8.3bn ✓. Other income added $1.0bn ✓, and tax took $2.3bn ✓. That left net income of $7.0bn ✓. Out of every hundred dollars of sales, Applied kept about $25 ✓ as profit.
Out of every $100 customers paid in FY2025…
Interest, investment gains and other income added +$3 for every $100 of sales, so the slices above add up to a little more than $100.
⏱️ Applied Materials by the clock
Spread the FY2025 totals evenly over its 364 days and you get this. Source: APPLIED MATERIALS INC /DE 10-K [4].
📈How is Applied Materials doing?
Applied has grown fast over ten years, though not in a straight line. From FY2015 to FY2025, sales grew 11.4% ✓ a year on average, from $9.7bn ✓ to $28.4bn ✓. Sales rose in 9 ✓ of those 10 ✓ years. The one fall was in FY2019, with growth of -12.6% ✓. Applied also kept more of each sale. Gross margin rose from 40.9% ✓ to 48.7% ✓, and operating margin from 17.5% ✓ to 29.2% ✓.
Growth slowed after FY2022. Sales rose 2.8% ✓ in FY2023, 2.5% ✓ in FY2024 and 4.4% ✓ in FY2025. Free cash flow fell to $5.7bn ✓ in FY2025, from $7.5bn ✓ a year earlier. In the same year, spending on buildings and equipment rose to $2.3bn ✓, from $1.2bn ✓.
The latest four quarters, to 26 July 2026, look stronger. Sales reached $30.8bn ✓, up 7.8% ✓ on the four quarters before. Operating margin was 29.6% ✓. The quarter to 26 July 2026 set a record, with revenue of $9.12 billion, up 25% on a year earlier 13. In February 2026, Applied agreed to pay $252.5 million to settle a US export controls inquiry about some China shipments 18. Full-year FY2026 results are due on 12 November 2026 20.
📝 The report card
Applied earns top marks for cash, good marks for profit and its balance sheet, and weak marks for growth and steadiness. Every company is graded on the same fixed scale, so an A means the same thing on every page. The strip shows where Applied Materials (orange) and its 2 peers land; further right is better.
Growth
Applied's sales grew 3.2% ✓ a year over its last three fiscal years, which earns a D ✓ on the fixed scale. Lam Research grew 10.1% ✓ a year over its own latest three fiscal years, a B ✓. KLA grew 9.0% ✓, a C ✓.
Why this measure? (higher is better)
Growing sales is the engine of a business. Mature giants rarely grow fast, so 5% a year already earns a C.
Profitability
Over the last three years combined, Applied kept 29.0% ✓ of sales as operating profit. That is just under the bar for the top grade, so it earns a B ✓. Lam kept 32.5% ✓, an A ✓, and KLA kept 37.3% ✓, also an A ✓.
Why this measure? (higher is better)
Operating margin is the share of each sales dollar left after running the business. Software and platforms often clear 30%; hardware makers usually sit below 10%.
Cash generation
Over the last three years combined, Applied turned 25.3% ✓ of sales into free cash flow, comfortably an A ✓. Its rivals did a little better. Lam reached 25.7% ✓, an A ✓, and KLA 29.7% ✓, also an A ✓.
Why this measure? (higher is better)
Free cash flow is the cash left after paying for factories, data centres and equipment. It funds dividends, buybacks and new bets.
Balance sheet
Applied's cash and investments minus its borrowings (leases and stakes in other companies not counted) equalled 7.1% ✓ of a year's sales, a B ✓. That is the figure at the end of FY2025, when cash and investments exceeded borrowings by $2.0bn ✓. Later, at 26 July 2026, it held $9.2bn ✓ of cash and investments against $7.7bn ✓ of debt. KLA owes more than it holds, at -17.3% ✓, a D ✓.
Why this measure? (higher is better)
More cash than debt gives a company room to ride out bad years. Some debt is normal; a lot of it makes a company fragile.
Steadiness
Applied's yearly growth swings a lot, with a standard deviation of 14.4% ✓, which earns a D ✓. Growth hit 34.3% ✓ in FY2017 but was -12.6% ✓ in FY2019. Lam swings even more, at 21.2% ✓, an F ✓, while KLA is steadier at 10.6% ✓, a C ✓.
Why this measure? (lower is better)
Steady growers are easier to plan around. Big swings mean sales depend on product cycles, the economy or one-off events.
🧑🏫 How the grades work
- Same scale for everyone. Each measure has fixed cut-offs (shown under each strip). Clear the A line and you get an A, whatever your peers do.
- Three years together. Profitability and cash generation add up the last three fiscal years before dividing, so one unusual year counts for less than it would on its own (a year much bigger than the others still weighs most).
- Peers for context. The rank shows how Applied Materials compares with the group. Companies within 0.1 percentage point share a rank.
- Same source. Every company's figures come from its own latest annual report (10-K), so fiscal years end in different months.
- Judgement, openly stated. The cut-offs are QuantVantage.ai's view of what good looks like for a large, established company. They are not a forecast or a recommendation.
11 years at a glance
Where the cash goes
From FY2015 to FY2025, Applied handed most of its free cash flow back to shareholders. It spent $42.3bn ✓ on buybacks and dividends, against $46.2bn ✓ of free cash flow. In FY2025 alone, payouts equalled 110% ✓ of free cash flow, because free cash flow dipped while buybacks rose to $4.9bn ✓.
🧮Ratios 101: what are Applied Materials' key financial ratios?
Ratios shrink Applied's big numbers into easy comparisons. They show a company that has become much more profitable since FY2015 but still trails its two closest rivals on margins. A ratio divides one number by another so companies of any size can be compared. Each card shows the formula with Applied Materials' real FY2025 numbers, the peer median and the trend.
💰 Profitability: how much of each sale is kept?
Gross margin
What is left from each sale after paying to make the product or deliver the service.
👉 At 48.7% ✓, up from 40.9% ✓ in FY2015, Applied keeps more of each sale than before, but less than the 55.9% ✓ peer median.
📏 Rule of thumb: Above 40% usually signals pricing power or a big software or services mix.
Operating margin
What is left after also paying for research, marketing and running the company.
👉 Applied's 29.2% ✓ is far above its 17.5% ✓ of FY2015, but below the 37.8% ✓ peer median.
📏 Rule of thumb: Above 20% is strong for a large company.
Net margin
The bottom line: profit after interest and taxes, per dollar of sales.
👉 Applied keeps 24.7% ✓ of sales as final profit, up from 14.3% ✓ in FY2015 but below the 33.4% ✓ peer median.
📏 Rule of thumb: Above 15% is strong; one-off tax items can move it in a single year.
Return on equity (ROE)
Profit earned for each dollar that shareholders have left in the company.
👉 ROE of 34.3% ✓ is up from 18.1% ✓ in FY2015. It is about half the 67.2% ✓ peer median.
📏 Rule of thumb: Around 15% or more is good, but buybacks shrink equity and can make ROE look huge.
⚙️ Efficiency: how hard do the assets work?
Return on assets (ROA)
Profit earned from everything the company owns, however it was paid for.
👉 ROA of 19.3% ✓ has more than doubled from 9.0% ✓ in FY2015, but trails the 28.9% ✓ peer median.
📏 Rule of thumb: Above 10% is strong; banks and factories usually earn less.
Asset turnover
Dollars of sales squeezed out of each dollar of assets.
👉 Applied's sales are 0.8x ✓ the value of everything it owns, up from 0.6x ✓ in FY2015 and close to the 0.9x ✓ peer median.
📏 Rule of thumb: Retailers often top 2x; asset-heavy businesses can sit below 0.5x.
Inventory days
How many days of products sit in warehouses before they are sold.
👉 Applied holds about 148 ✓ days of stock, more than the 117 ✓ days of FY2015 but fewer than the peer median of 195 ✓ days.
📏 Rule of thumb: Fewer days means less cash tied up and less risk of products going stale.
🛟 Safety: could it survive a bad year?
Current ratio
Can short-term assets (cash, money owed by customers, stock) pay the bills due within a year?
👉 At 2.6x ✓, Applied's short-term assets cover its short-term bills well, up from 2.4x ✓ in FY2015 and near the 2.8x ✓ peer median.
📏 Rule of thumb: Above 1.0x is the classic comfort line, but cash-rich giants can run below it on purpose.
Debt to equity
How much the company has borrowed for each dollar shareholders have in it.
👉 Applied's 0.3x ✓ is half its 0.6x ✓ of FY2015 and below the 0.6x ✓ peer median.
📏 Rule of thumb: Below 1.0x is conservative. Like ROE, it can rise when buybacks shrink equity, even if debt has not changed.
Interest cover
How many times over operating profit could pay the year's interest bill.
👉 Operating profit covers the interest bill 30.8x ✓, up from 16.4x ✓ in FY2015 and not far below the 35.8x ✓ peer median.
📏 Rule of thumb: Above 5x is comfortable; below 2x is a warning sign.
💵 Cash and owners: where does the money end up?
Cash conversion
Does reported profit turn into real cash? Free cash flow is operating cash minus capital spending.
👉 Applied turns profit into cash at 0.8x ✓, a little above the 0.7x ✓ peer median and its own 0.7x ✓ in FY2015.
📏 Rule of thumb: Near or above 1.0x means profits are backed by cash.
R&D intensity
How much of each sales dollar goes into inventing future products.
👉 Applied spends 12.6% ✓ of sales on R&D, more than the 10.8% ✓ peer median, though down from 15.0% ✓ in FY2015 as sales grew.
📏 Rule of thumb: Tech companies often spend 10% to 20%; more is not always better if it does not pay off.
Stock pay
Pay given to staff in shares instead of cash. It is a real cost to owners because it adds shares.
👉 Stock pay is 2.4% ✓ of sales, a little above the 2.0% ✓ peer median and up from 1.9% ✓ in FY2015.
📏 Rule of thumb: Under 5% of sales is modest for a tech company.
Shareholder payout
How much of the year's profit was handed back to owners.
👉 Applied returned 89.7% ✓ of FY2025 profit to shareholders, above the 69.9% ✓ peer median but below the 131.6% ✓ it paid out in FY2015.
📏 Rule of thumb: Above 100% means it returned more than it earned, using cash savings or debt.
Ratios use fiscal-year-end balance sheet values. Inputs are shown rounded, so dividing them can differ from the result in the last digit. A peer median leaves out peers that do not report the inputs, or where the ratio means nothing (for example, negative shareholders' equity). Rules of thumb are general guides from QuantVantage.ai, not hard limits. No share-price ratios (like price-to-earnings) are shown on this page.
🥊Who are Applied Materials' competitors?
Applied's closest rivals are other makers of chipmaking machines. Lam Research fights it in deposition and etch 8, while KLA overlaps in tools that inspect and measure chips 29.
| Company | Where they compete | Revenue | Growth/yr (3y) | Op. margin | FCF margin |
|---|---|---|---|---|---|
| Applied Materials (AMAT, FY2025) | A broad range of chipmaking machines, plus the service and parts that keep them running | $28.4bn | 3.2% | 29.2% | 20.1% |
| Lam Research (LRCX, FY2026) | Deposition and etch machines; Lam names Applied its main rival in some deposition work 8 | $23.2bn | 10.1% | 35.3% | 21.1% |
| KLA (KLAC, FY2026) | Inspection and measurement tools that help chipmakers raise yields 29 | $13.6bn | 9.0% | 40.4% | 27.7% |
KLA also names ASML, Hitachi High-Tech, Lasertec and Onto Innovation among its rivals 21. In China, Applied says it could face more competition from local equipment makers backed by government funding 103. Its service arm also competes with outside service firms and with chipmakers that fix their own tools 10.
🧭Applied Materials SWOT: strengths, weaknesses, opportunities and threats
💪 Strengths
- Applied says it has the widest range of products in chip equipment, and it can combine its tools into joined-up solutions 2.
- In FY2025, services brought in $6.4bn ✓, and that demand grows as more Applied machines are installed 3.
- Over the last three years combined, Applied turned 25.3% ✓ of sales into free cash flow, an A ✓ on our report card.
- Applied ended FY2025 with a $15.0 billion backlog of orders 11.
🩹 Weaknesses
- A few buyers matter a lot: two customers made up about 20% and 14% of revenue in the nine months to July 2026 16.
- Sales grew only 3.2% ✓ a year over the three years to FY2025, slower than Lam or KLA.
- Applied's operating margin of 29.2% ✓ trails the 37.8% ✓ median of its two closest rivals.
- Free cash flow fell to $5.7bn ✓ in FY2025, from $7.6bn ✓ in FY2023.
🚀 Opportunities
- Applied expects equipment spending to stay strong as AI, data centers, high-bandwidth memory and advanced packaging grow 3.
- It launched six new chipmaking systems for DRAM and advanced packaging in the quarter to July 2026 13.
- Applied agreed in October 2026 to raise its stake in Besi, a Dutch maker of chip assembly machines, to about 20% 17.
- It unveiled SENZ, a display platform for AI smart glasses, and signed a long-term optics deal with EssilorLuxottica 13.
⚠️ Threats
- US export rules limit what Applied can sell in China, and Applied says government-backed local rivals could win more business 103.
- China's share of sales fell to 30% in FY2025, from 37% in FY2024 3.
- Applied agreed in February 2026 to pay $252.5 million to settle a US export controls inquiry 18.
- Outside service firms and customers who fix their own tools compete with Applied's service arm 10.
🏰Does Applied Materials have a moat?
Why 4?
Applied's service sales grow as more of its machines are installed and customers renew long-term service deals 3. At 26 October 2025 it had a $15.0 billion backlog, about 31% of it due after a year 11. Still, each new tool must win its place in a customer's line against rivals 12, and some customers service their own machines 10.
Why 1?
Applied's EPIC Center brings chipmakers, universities and partners together to speed new ideas into factories, with 11 engagements by August 2026 13. That is teamwork, not a network where each new user makes the product better for others.
Why 3?
Applied offers the industry's widest range of chip tools and can combine them into joined-up solutions 2. It has about 36,500 staff in 25 countries 14. It added a US$500 million campus in Singapore that more than doubles its advanced cleanroom space there 13. But rivals earn more, with a 37.8% ✓ peer median operating margin against Applied's 29.2% ✓.
A moat is what keeps rivals from taking a company's customers and profits. Scores are QuantVantage.ai's judgement (5 = strongest), set with the same rubric on every explainer (orange is Applied Materials; grey dots are peers).
🔭What should you watch next?
The bigger Besi stake
The extra Besi shares that take Applied to about 20% arrive only once a US antitrust waiting period ends 17.
AI and memory spending
Applied expects equipment spending to stay strong, helped by AI, data centers, high-bandwidth memory and advanced packaging 3.
📚Learn the words
❓Frequently asked questions about Applied Materials
How does Applied Materials make money?
Applied makes most of its money selling chipmaking machines, and most of the rest from servicing them. In FY2025, Semiconductor Systems brought in $20.8bn ✓ and Applied Global Services $6.4bn ✓. The Other group, which includes display equipment 2, added $1.2bn ✓.
Does Applied Materials make chips?
No, Applied does not make chips. It sells the machines, services and software that chipmakers use to make them 23.
Who are Applied Materials' biggest competitors?
Lam Research is a main rival in deposition and etch machines 8. KLA competes in tools that inspect and measure chips 29. In China, Applied says it could face more competition from local equipment makers backed by government funding 103.
How much of Applied's sales come from China?
China was Applied's biggest market in FY2025, at 30% ✓ of sales, worth $8.5bn ✓. That share was down from 37% in FY2024 3.
Is Applied Materials' revenue still growing?
Yes, but more slowly than before. Sales rose 4.4% ✓ in FY2025 and 7.8% ✓ in the four quarters to July 2026. Over ten years, growth averaged 11.4% ✓ a year.
Who is Applied Materials' CEO?
Gary Dickerson has been Applied's CEO since September 2013 14. Before that, he spent 18 years at KLA-Tencor and then ran Varian Semiconductor, which Applied bought in 2011 14.
How much does Applied spend on research?
Applied spent $3.6bn ✓ on research and development in FY2025. That was 12.6% ✓ of sales, up from $1.5bn ✓ in FY2015.
Does Applied Materials pay a dividend?
Yes. Applied paid $1.4bn ✓ in dividends in FY2025. Its board declared $0.53 per share in March and June 2026, up from $0.46 in December 2025 16.
🎮Play: higher or lower, then test yourself
Figures come from each company's latest annual report (10-K); fiscal years end in different months. Sources: [4] [5] [6].
🧠 Test yourself
5 quick questions. Score: 0 / 5
1. What does Applied Materials mainly sell?
2. Which place was Applied's biggest market in FY2025?
3. About how much of Applied's sales came from its chipmaking machines segment in FY2025?
4. Applied's Other group includes machines for making what?
5. Where did CEO Gary Dickerson spend 18 years before joining Applied?
🔎Sources and method
Every figure comes from a source listed here or is calculated from those sources (marked ✓). Company financials are taken from SEC filings (10-K and 10-Q) as tagged in XBRL. Peer grades rank the same measures across the company and its peers. This page contains no share-price data and no valuation.
- Applied Materials (AMAT) Form 10-K for fiscal year 2025, filed 2025-12-12 — revenue and cost of sales by product, segment and geography (accessed 2026-10-28)
- Applied Materials Form 10-K, fiscal year ended October 26, 2025 (cover and Item 1 Business overview) — Headquarters, incorporation year, fiscal year end, segments and what each segment sells (accessed 2026-10-29)
- Applied Materials Form 10-K, fiscal year ended October 26, 2025 (Item 7 MD&A) — Semiconductor Systems customer markets, AGS service agreements, display in Corporate and Other, China export rules (accessed 2026-10-29)
- SEC EDGAR companyfacts: Applied Materials (AMAT) — annual 10-K facts (accessed 2026-10-28)
- SEC EDGAR companyfacts: LAM RESEARCH CORP (LRCX) — annual 10-K facts (accessed 2026-10-28)
- SEC EDGAR companyfacts: KLA CORP (KLAC) — annual 10-K facts (accessed 2026-10-28)
- SEC EDGAR companyfacts: Applied Materials (AMAT) — balance sheet at 2026-07-26 (accessed 2026-10-28)
- Lam Research 10-K for fiscal 2026 (filed 2026-08-07) — Item 1 Business: Competition (named rivals, equipment qualification, export-control effects) (accessed 2026-10-29)
- KLA Corporation Form 10-K, fiscal year ended June 30, 2026 (Item 1 Business) — KLA segments; Semiconductor Process Control sells inspection and metrology products (accessed 2026-10-29)
- Applied Materials Form 10-K, fiscal year ended October 26, 2025 (Item 1, Marketing and Sales; Competition) — Direct sales force, largest customers' revenue shares, competitive factors and China competition (accessed 2026-10-29)
- Applied Materials Form 10-K, fiscal year ended October 26, 2025 (Item 1, Backlog) — Backlog by segment at October 26, 2025 and share not expected within 12 months (accessed 2026-10-29)
- Applied Materials Form 10-K, fiscal year ended October 26, 2025 (Item 1A Risk Factors) — Revenue outside the US, customer concentration, tool-of-record competition, export rules (accessed 2026-10-29)
- Applied Materials third quarter fiscal 2026 results press release (Form 8-K Exhibit 99.1) — Q3 FY2026 record revenue, new products, EPIC Center partners, Singapore campus, Q4 FY2026 revenue outlook (accessed 2026-10-29)
- Applied Materials Form 10-K, fiscal year ended October 26, 2025 (Item 1, Our People; executive officers) — Employee count and regions; CEO and his career (accessed 2026-10-29)
- Applied Materials Form 10-K, fiscal year ended October 26, 2025 (Item 1, Patents and Licenses) — Number of active patents (accessed 2026-10-29)
- Applied Materials Form 10-Q, quarter ended July 26, 2026 — 200mm business moved to Semiconductor Systems; customer concentration; dividends declared; BIS settlement charge (accessed 2026-10-29)
- Applied Materials press release on increasing its investment in BE Semiconductor Industries (Form 8-K Exhibit 99.1, October 26, 2026) — Besi stake to about 20%, first investment April 2025, HSR waiting period, partnership scope (accessed 2026-10-29)
- Applied Materials Form 8-K, February 11, 2026 (settlement with the Bureau of Industry and Security) — Export controls settlement amount and terms; DOJ and SEC inquiries closed (accessed 2026-10-29)
- SEC EDGAR companyfacts: Applied Materials (AMAT) — quarterly 10-Q/10-K facts (accessed 2026-10-28)
- Applied Materials investor relations: Applied Materials to report fourth quarter and fiscal 2026 results — Q4 FY2026 results date (accessed 2026-10-29)
- KLA Corporation Form 10-K for fiscal year ended June 30, 2026 (filed 2026-08-06) — Item 1 Business: competition (accessed 2026-10-29)