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Applied Materials (AMAT) explained: how it makes money, how it's doing, what protects it

A plain-English guide to the company that sells the machines chipmakers use. See what it sells, where the money goes, who it competes with and what keeps customers coming back.

⚡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% ✓.

Revenue, FY2025
$28.4bn✓
Profit, FY2025
$7.0bn✓
Sales growth, 4 quarters to 26 Jul 2026
7.8%✓
Net cash (cash and investments minus borrowings; leases and stakes in other companies not counted), 26 Jul 2026
$1.5bn✓
Headquarters
Santa Clara, California 2
Incorporated
1967 2
Employees
About 36,500 full-time staff in 25 countries 14
CEO
Gary Dickerson, since September 2013 14
Fiscal year ends
Last Sunday in October 2

📱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.

📺

Other

Businesses outside the two main segments, including machines for making displays 2. Here, Other is the FY2025 revenue not tagged to the two segments: $1.2bn ✓, or 4% ✓ of the total.

👥 Includes makers of screens 2.

How the mix has shifted

Revenue mix by productFY2023Semiconductor Systems: $19.7bn (74%)Semiconductor Systems 74%Applied Global Services: $5.7bn (22%)Applied Global Services 22%Other: $1.1bn (4%)FY2024Semiconductor Systems: $19.9bn (73%)Semiconductor Systems 73%Applied Global Services: $6.2bn (23%)Applied Global Services 23%Other: $1.0bn (4%)FY2025Semiconductor Systems: $20.8bn (73%)Semiconductor Systems 73%Applied Global Services: $6.4bn (23%)Applied Global Services 23%Other: $1.2bn (4%)
Revenue mix by productFY23Semiconductor Systems: $19.7bn (74%)74%Applied Global Services: $5.7bn (22%)22%Other: $1.1bn (4%)FY24Semiconductor Systems: $19.9bn (73%)73%Applied Global Services: $6.2bn (23%)23%Other: $1.0bn (4%)FY25Semiconductor Systems: $20.8bn (73%)73%Applied Global Services: $6.4bn (23%)23%Other: $1.2bn (4%)Semiconductor SystemsApplied Global ServicesOther
Share of revenue by business line, by fiscal year. Source: APPLIED MATERIALS INC /DE 10-K filed 2025-12-12.

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.

Revenue by regionChina$8.5bn 30% of salesTaiwan$6.9bn 24% of salesSouth Korea$5.6bn 20% of salesUnited States$3.1bn 11% of salesJapan$2.3bn 8% of salesSoutheast Asia$1.1bn 4% of salesEurope$1.0bn 3% of sales
Revenue by regionChina$8.5bn 30%Taiwan$6.9bn 24%South Korea$5.6bn 20%United States$3.1bn 11%Japan$2.3bn 8%Southeast Asia$1.1bn 4%Europe$1.0bn 3%
Revenue by region, FY2025. Source: APPLIED MATERIALS INC /DE 10-K filed 2025-12-12.

💸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.

Money map FY2025: how revenue turns into profitSemiconductor Systems → Revenue: $20.8bnApplied Global Services → Revenue: $6.4bnOther → Revenue: $1.2bnRevenue → Gross profit: $13.8bnRevenue → Cost of sales: $14.6bnGross profit → Operating profit: $8.3bnGross profit → R&D: $3.6bnGross profit → Selling & admin: $1.8bnGross profit → Other operating costs: $0.2bnOperating profit → Net income: $6.0bnOperating profit → Income tax: $2.3bnOther income → Net income: $1.0bnSemiconductor Systems$20.8bn · 73%Applied Global Services$6.4bn · 23%Other$1.2bn · 4%Revenue$28.4bnGross profit$13.8bn · 49%Cost of sales$14.6bn · 51%Operating profit$8.3bn · 29%R&D$3.6bn · 13%Selling & admin$1.8bn · 6%Other operating costs$0.2bn · 1%Net income$7.0bn · 25%Income tax$2.3bn · 8%Other income$1.0bn · 3%
Money map FY2025: how revenue turns into profitSemiconductor Systems: $20.8bnApplied Global Services: $6.4bnOther: $1.2bnSemiconductor Systems$20.8bn · 73%Applied Global Services$6.4bn · 23%Other$1.2bn · 4%Revenue: $28.4bnRevenue$28.4bn · 100%Gross profit: $13.8bnCost of sales: $14.6bnGross profit$13.8bn · 49%Cost of sales$14.6bn · 51%Operating profit: $8.3bnR&D: $3.6bnSelling & admin: $1.8bnOther operating costs: $0.2bnOperating profit$8.3bn · 29%R&D$3.6bn · 13%Selling & admin$1.8bn · 6%Other operating costs$0.2bn · 1%Net income: $7.0bnIncome tax: $2.3bnNet income$7.0bn · 25%Income tax$2.3bn · 8%
Money map (a Sankey diagram): band widths are to scale. Hover a band for the amount. Source: APPLIED MATERIALS INC /DE 10-K filings.

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…

Making the products and services $51Research and development $12Selling and admin $6Other operating costs $1Income tax $8Profit kept $25Interest, investment gains and other income, added on top +$3

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.

💡
Services grow with the number of Applied machines in the field. Applied says demand for its services rises as more of its systems are installed and as customers renew long-term service deals 3. Services brought in $6.4bn ✓ in FY2025, up from $5.7bn ✓ in FY2023.

⏱️ 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].

🛒
$78m
in sales every day
⏱️
$223
of profit every second
🔬
$10m
on research every day
🎁
$17m
handed to shareholders every day

📈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.

D

Growth

Sales growth per year, last 3 fiscal years
3.2% · peer median 9.5%
#3 of 3 in the peer group
A ≥ 15.0%B ≥ 10.0%C ≥ 5.0%D ≥ 0.0%F below 0.0%

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.

B

Profitability

Operating margin, last 3 years combined
29.0% · peer median 34.9%
#3 of 3 in the peer group
A ≥ 30.0%B ≥ 20.0%C ≥ 10.0%D ≥ 5.0%F below 5.0%

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%.

A

Cash generation

Free cash flow as a share of sales, last 3 years combined
25.3% · peer median 27.7%
#3 of 3 in the peer group
A ≥ 20.0%B ≥ 15.0%C ≥ 10.0%D ≥ 5.0%F below 5.0%

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.

B

Balance sheet

Net cash (cash and investments minus borrowings; leases and stakes in other companies not counted) as a share of a year's sales
7.1% · peer median -4.6%
#2 of 3 in the peer group
A ≥ 20.0%B ≥ 5.0%C ≥ -10.0%D ≥ -30.0%F below -30.0%

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.

D

Steadiness

How much yearly sales growth swings (standard deviation, up to 10 years)
14.4% · peer median 15.9%
#2 of 3 in the peer group
A ≤ 5.0%B ≤ 8.0%C ≤ 12.0%D ≤ 18.0%F above 18.0%

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
  1. 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.
  2. 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).
  3. Peers for context. The rank shows how Applied Materials compares with the group. Companies within 0.1 percentage point share a rank.
  4. Same source. Every company's figures come from its own latest annual report (10-K), so fiscal years end in different months.
  5. 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

Revenue
$28.4bn
FY2025
Revenue by fiscal yearFY2015: $9.7bnFY2016: $10.8bnFY2017: $14.7bnFY2018: $16.7bnFY2019: $14.6bnFY2020: $17.2bnFY2021: $23.1bnFY2022: $25.8bnFY2023: $26.5bnFY2024: $27.2bnFY2025: $28.4bnFY2015FY2025
Operating margin
29.2%
FY2025
Operating marginFY2015FY2025
Free cash flow
$5.7bn
FY2025
Free cash flow by fiscal yearFY2015: $0.9bnFY2016: $2.3bnFY2017: $3.4bnFY2018: $3.2bnFY2019: $2.8bnFY2020: $3.4bnFY2021: $4.8bnFY2022: $4.6bnFY2023: $7.6bnFY2024: $7.5bnFY2025: $5.7bnFY2015FY2025
Net cash
$2.0bn
end of FY2025
Net cash by fiscal yearFY2015: $0.4bnFY2016: $0.4bnFY2017: $2.0bnFY2018: -$1.3bnFY2019: -$1.7bnFY2020: $0.3bnFY2021: $0.0bnFY2022: -$2.9bnFY2023: $1.3bnFY2024: $2.5bnFY2025: $2.0bnFY2015FY2025

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 ✓.

Free cash flow vs cash returned to shareholders$0bnFY2016 free cash flow $2.3bnFY2016 buybacks + dividends $2.3bnFY16FY2017 free cash flow $3.4bnFY2017 buybacks + dividends $1.6bnFY17FY2018 free cash flow $3.2bnFY2018 buybacks + dividends $5.9bnFY18FY2019 free cash flow $2.8bnFY2019 buybacks + dividends $3.2bnFY19FY2020 free cash flow $3.4bnFY2020 buybacks + dividends $1.4bnFY20FY2021 free cash flow $4.8bnFY2021 buybacks + dividends $4.6bnFY21FY2022 free cash flow $4.6bnFY2022 buybacks + dividends $7.0bnFY22FY2023 free cash flow $7.6bnFY2023 buybacks + dividends $3.2bnFY23FY2024 free cash flow $7.5bnFY2024 buybacks + dividends $5.0bnFY24FY2025 free cash flow $5.7bnFY2025 buybacks + dividends $6.3bnFY25
Free cash flow vs cash returned to shareholders$0bnFY2020 free cash flow $3.4bnFY2020 buybacks + dividends $1.4bnFY20FY2021 free cash flow $4.8bnFY2021 buybacks + dividends $4.6bnFY21FY2022 free cash flow $4.6bnFY2022 buybacks + dividends $7.0bnFY22FY2023 free cash flow $7.6bnFY2023 buybacks + dividends $3.2bnFY23FY2024 free cash flow $7.5bnFY2024 buybacks + dividends $5.0bnFY24FY2025 free cash flow $5.7bnFY2025 buybacks + dividends $6.3bnFY25
■ Free cash flow   ■ Buybacks + dividends. Source: APPLIED MATERIALS INC /DE 10-K filings.

🧮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?

Higher is better

Gross margin

48.7%
Gross profit$13.8bn$28.4bnSales=48.7%

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.

Peer median 55.9% (2 peers)FY2015 40.9%
Gross margin by fiscal yearFY2015FY2025
Higher is better

Operating margin

29.2%
Operating profit$8.3bn$28.4bnSales=29.2%

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.

Peer median 37.8% (2 peers)FY2015 17.5%
Operating margin by fiscal yearFY2015FY2025
Higher is better

Net margin

24.7%
Net income$7.0bn$28.4bnSales=24.7%

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.

Peer median 33.4% (2 peers)FY2015 14.3%
Net margin by fiscal yearFY2015FY2025
It depends

Return on equity (ROE)

34.3%
Net income$7.0bn$20.4bnShareholders' equity=34.3%

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.

Peer median 67.2% (2 peers)FY2015 18.1%
Return on equity (ROE) by fiscal yearFY2015FY2025

⚙️ Efficiency: how hard do the assets work?

Higher is better

Return on assets (ROA)

19.3%
Net income$7.0bn$36.3bnTotal assets=19.3%

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.

Peer median 28.9% (2 peers)FY2015 9.0%
Return on assets (ROA) by fiscal yearFY2015FY2025
Higher is better

Asset turnover

0.8x
Sales$28.4bn$36.3bnTotal assets=0.8x

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.

Peer median 0.9x (2 peers)FY2015 0.6x
Asset turnover by fiscal yearFY2015FY2025
Lower is better

Inventory days

148 days
Inventory$5.9bn$14.6bnCost of sales× 365=148 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.

Peer median 195 days (2 peers)FY2015 117 days
Inventory days by fiscal yearFY2015FY2025

🛟 Safety: could it survive a bad year?

It depends

Current ratio

2.6x
Current assets$20.9bn$8.0bnCurrent liabilities=2.6x

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.

Peer median 2.8x (2 peers)FY2015 2.4x
Current ratio by fiscal yearFY2015FY2025
Lower is better

Debt to equity

0.3x
Total debt$6.6bn$20.4bnShareholders' equity=0.3x

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.

Peer median 0.6x (2 peers)FY2015 0.6x
Debt to equity by fiscal yearFY2015FY2025
Higher is better

Interest cover

30.8x
Operating profit$8.3bn$0.3bnInterest expense=30.8x

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.

Peer median 35.8x (2 peers)FY2015 16.4x
Interest cover by fiscal yearFY2015FY2025

💵 Cash and owners: where does the money end up?

Higher is better

Cash conversion

0.8x
Free cash flow$5.7bn$7.0bnNet income=0.8x

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.

Peer median 0.7x (2 peers)FY2015 0.7x
Cash conversion by fiscal yearFY2015FY2025
It depends

R&D intensity

12.6%
R&D$3.6bn$28.4bnSales=12.6%

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.

Peer median 10.8% (2 peers)FY2015 15.0%
R&D intensity by fiscal yearFY2015FY2025
Lower is better

Stock pay

2.4%
Share-based pay$0.7bn$28.4bnSales=2.4%

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.

Peer median 2.0% (2 peers)FY2015 1.9%
Stock pay by fiscal yearFY2015FY2025
It depends

Shareholder payout

89.7%
Dividends + buybacks$6.3bn$7.0bnNet income=89.7%

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.

Peer median 69.9% (2 peers)FY2015 131.6%
Shareholder payout by fiscal yearFY2015FY2025

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.

Peer map: growth vs profitability, bubble size = revenue0%5%10%0%10%20%30%40%Sales growth per year, 3 years →Operating margin →Applied Materials: revenue $28.4bn, growth 3.2%/yr, operating margin 29.2%AMATLam Research: revenue $23.2bn, growth 10.1%/yr, operating margin 35.3%LRCXKLA: revenue $13.6bn, growth 9.0%/yr, operating margin 40.4%KLAC
Peer map: growth vs profitability, bubble size = revenue0%5%10%0%10%20%30%40%Sales growth per year, 3 years →Operating margin →Applied Materials: revenue $28.4bn, growth 3.2%/yr, operating margin 29.2%AMATLam Research: revenue $23.2bn, growth 10.1%/yr, operating margin 35.3%LRCXKLA: revenue $13.6bn, growth 9.0%/yr, operating margin 40.4%KLAC
Peer map from each company's latest 10-K. Bubble size = revenue. Source: SEC filings [4] [5] [6].
CompanyWhere they competeRevenueGrowth/yr (3y)Op. marginFCF margin
Applied Materials (AMAT, FY2025)A broad range of chipmaking machines, plus the service and parts that keep them running$28.4bn3.2%29.2%20.1%
Lam Research (LRCX, FY2026)Deposition and etch machines; Lam names Applied its main rival in some deposition work 8$23.2bn10.1%35.3%21.1%
KLA (KLAC, FY2026)Inspection and measurement tools that help chipmakers raise yields 29$13.6bn9.0%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?

Narrow moatChip factories build Applied's machines and service deals into their lines, but a few big buyers, tool-by-tool contests and China export rules limit its power.
Brand 3/5
Why 3?

Applied calls itself the leader in materials engineering, with tools used to make nearly every chip in the world 2. But its buyers are few and large: two customers made up about 19% and 15% of FY2025 revenue 10.

Switching costs 4/5
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.

Network effects 1/5
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.

Cost advantages and scale 3/5
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% ✓.

Intangibles (patents, licences, regulation) 3/5
Why 3?

Applied holds more than 23,500 active patents and says that, taken together, they are a big part of its business 15. But US export rules limit its sales in China, where government-backed local rivals could gain 103.

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?

12 Nov 2026

Q4 FY2026 results and the full-year report

Applied will report its fourth quarter and full FY2026 results 20. It expected fourth-quarter revenue of $10.25 billion, plus or minus $500 million 13. Figures on this page run to FY2025 and the four quarters to 26 July 2026.

From FY2026 figures

A new segment split

Applied moved its 200mm equipment business, which serves chip markets behind the cutting edge, from services into Semiconductor Systems from the first quarter of FY2026 162. So new segment figures will not match the FY2025 split on this page.

After US antitrust review

The bigger Besi stake

The extra Besi shares that take Applied to about 20% arrive only once a US antitrust waiting period ends 17.

Ongoing

Export controls and China

Under its February 2026 settlement, Applied must audit its export compliance program and keep up training and reporting 18. US export rules already limit some sales to China 103.

Ongoing

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

Revenue (sales)All the money a company takes in from customers before paying any costs.
Semiconductor (chip)A tiny slice of material, usually silicon, carved with huge numbers of tiny switches that store or process information.
WaferA thin, round disc of silicon on which many chips are built at once before it is cut up.
FoundryA chip factory that makes chips designed by other companies.
DRAM and NANDTwo kinds of memory chip. DRAM is fast working memory that forgets when the power goes off; NAND flash keeps data with the power off.
Installed baseAll the machines a company has already sold that are still working in customers' factories. They need service and spare parts.
BacklogOrders customers have placed that the company has not yet delivered.
Export controlsGovernment rules that limit which products can be sold to certain countries or companies.
Gross marginThe share of each sales dollar left after paying to make the product or deliver the service. Higher means each sale is more profitable.
Operating profitProfit from the main business after paying for products, research, marketing and admin, but before interest and tax.
Free cash flowThe cash a business has left after running itself and buying equipment. It can be used for dividends, buybacks or saving.
Fiscal yearA company's own 12-month accounting year. Applied's ends on the last Sunday in October, so FY2025 ended in October 2025.
Economic moatA lasting advantage, like a strong brand or high switching costs, that keeps rivals from taking a company's customers.

❓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

Higher or lower · round 1 of 6

Figures come from each company's latest annual report (10-K); fiscal years end in different months. Sources: [4] [5] [6].

Score: 0

🧠 Test yourself

5 quick questions. Score: 0 / 5

1. What does Applied Materials mainly sell?

Applied sells the machines, services and software used to make chips, not chips themselves 23.

2. Which place was Applied's biggest market in FY2025?

China made up 30% ✓ of Applied's sales in FY2025.

3. About how much of Applied's sales came from its chipmaking machines segment in FY2025?

Semiconductor Systems made up 73% ✓ of Applied's sales in FY2025.

4. Applied's Other group includes machines for making what?

Applied's Other group includes its business making equipment for the display industry 2.

5. Where did CEO Gary Dickerson spend 18 years before joining Applied?

Dickerson spent 18 years at KLA-Tencor, then ran Varian Semiconductor, which Applied bought 14.

🔎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.

  1. 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)
  2. 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)
  3. 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)
  4. SEC EDGAR companyfacts: Applied Materials (AMAT) — annual 10-K facts (accessed 2026-10-28)
  5. SEC EDGAR companyfacts: LAM RESEARCH CORP (LRCX) — annual 10-K facts (accessed 2026-10-28)
  6. SEC EDGAR companyfacts: KLA CORP (KLAC) — annual 10-K facts (accessed 2026-10-28)
  7. SEC EDGAR companyfacts: Applied Materials (AMAT) — balance sheet at 2026-07-26 (accessed 2026-10-28)
  8. 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)
  9. 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)
  10. 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)
  11. 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)
  12. 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)
  13. 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)
  14. 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)
  15. Applied Materials Form 10-K, fiscal year ended October 26, 2025 (Item 1, Patents and Licenses) — Number of active patents (accessed 2026-10-29)
  16. 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)
  17. 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)
  18. 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)
  19. SEC EDGAR companyfacts: Applied Materials (AMAT) — quarterly 10-Q/10-K facts (accessed 2026-10-28)
  20. Applied Materials investor relations: Applied Materials to report fourth quarter and fiscal 2026 results — Q4 FY2026 results date (accessed 2026-10-29)
  21. KLA Corporation Form 10-K for fiscal year ended June 30, 2026 (filed 2026-08-06) — Item 1 Business: competition (accessed 2026-10-29)