AMAT
Applied Materials, Inc.
Technology · Semiconductor Equipment & Materials · United States · Stock
Score Breakdown
Scored for Dividend Income profile
Sub-scores are 0–20 each; Model Score is weighted by your selected investment goal. How it works →
Why Ranked Here
- Near-maximum profitability metrics (29.2% operating margin, 24.7% net margin, 19.3% ROA) and a near-maximum dividend score anchored by consistent annual DPS growth and a 19.8% payout ratio drove the composite score to 69.8/100.
- Strong recent quarterly momentum, with revenue and net income both accelerating sharply into 2026Q2, contributed meaningfully to the overall score.
- The stock earned a Low risk rating and Dividend Candidate label, reflecting the combination of financial strength and a reliable, growing dividend.
Why Not Higher
- The growth factor was penalized by a -2.5% decline in net income and near-flat diluted EPS (+0.6%) in FY2025, limiting the overall composite score despite strong revenue growth.
- The theme factor contributed zero points under the model's current methodology, meaning the AI Infrastructure and Semiconductors assignments provided no score uplift despite being high-profile macro tailwinds.
Data Confidence
10 / 10
Very High — full data coverage
Why This Score
Grounded in figures from this company's SEC EDGAR filings — not a restatement of the score itself.
Revenue grew from FY2024's $27,176,000,000 to FY2025's $28,368,000,000, a gain of +4.4%, but net income declined -2.5% from FY2024's $7,177,000,000 to FY2025's $6,998,000,000, and diluted EPS rose only +0.6% from FY2024's $8.61 to FY2025's $8.66.
The model rewarded modest top-line expansion but penalized the contraction in net income and near-flat EPS, producing a below-midpoint score that reflects mixed growth signals across the three key metrics.
In FY2025, Applied Materials posted a net margin of 24.7%, an operating margin of 29.2%, and a return on assets of 19.3%.
These figures indicate that the company converts a substantial share of revenue into both operating and net income while generating strong returns on its asset base, which the model rewarded with a near-maximum profitability score.
Filing evidence currently available does not support a more specific explanation for this factor.
Revenue across the last four quarters moved from $7,302,000,000 in 2025Q3 to $6,800,000,000 in 2025Q4, then recovered to $7,012,000,000 in 2026Q1 and accelerated to $7,910,000,000 in 2026Q2; net income followed a consistent upward path from $1,779,000,000 in 2025Q3 to $2,806,000,000 in 2026Q2, and operating income rebounded from a trough of $1,712,000,000 in 2025Q4 to $2,523,000,000 in 2026Q2.
The model recognized the strong sequential acceleration in both revenue and net income through 2026Q2, while the mid-period dip in revenue and operating income in 2025Q4 likely tempered the score below the maximum.
Dividends per share have risen each year from $1.02 in FY2022 to $1.22 in FY2023, $1.52 in FY2024, and $1.78 in FY2025, while the FY2025 payout ratio stood at a conservative 19.8% of net income.
The model rewarded the consistent multi-year dividend growth trajectory alongside a low payout ratio that signals ample room for continued increases, producing a near-maximum score.
Applied Materials is assigned to the AI Infrastructure and Semiconductors macro themes.
Although the company carries two high-profile macro theme assignments, this assignment did not translate into score under the model's current methodology.
Research Summary
AI-generated analysis reflects data and conditions as of the report date shown above. Verify any specific figures through primary sources before acting on this analysis.
Applied Materials delivered modest top-line growth of +4.4% in FY2025, reaching $28.4 billion in revenue, though net income slipped -2.5% and diluted EPS was nearly flat at $8.66. The company's profitability profile remains exceptional, with a 29.2% operating margin, 24.7% net margin, and 19.3% return on assets. Recent quarterly momentum has been strong, with revenue accelerating to $7.91 billion and net income reaching $2.81 billion in 2026Q2. The dividend track record is compelling, with per-share payouts rising every year from $1.02 in FY2022 to $1.78 in FY2025 at a conservative 19.8% payout ratio, earning the stock a Dividend Candidate label.
Plain English
Applied Materials is a highly profitable chip-equipment company that keeps growing its dividend every year while maintaining a very low payout ratio, meaning there is plenty of room to keep raising it — though recent earnings growth has been a bit uneven.
Bull Case vs. Bear Case
Bull Case
- Exceptional profitability: a 29.2% operating margin and 24.7% net margin in FY2025 show the company converts a large share of revenue into profit, supported by a strong 19.3% return on assets.
- Accelerating quarterly momentum: revenue climbed from $6.80 billion in 2025Q4 to $7.91 billion in 2026Q2, while net income surged from $1.90 billion to $2.81 billion over the same period.
- Consistent dividend growth with room to run: dividends per share have risen every year from $1.02 in FY2022 to $1.78 in FY2025, and the payout ratio of only 19.8% leaves substantial capacity for continued increases.
Bear Case
- Net income declined -2.5% year-over-year in FY2025 despite revenue growth, and diluted EPS rose only +0.6%, signaling that profitability expansion is not keeping pace with top-line gains.
- Revenue experienced a mid-cycle dip to $6.80 billion in 2025Q4 and operating income fell to $1.71 billion that same quarter, highlighting that quarterly results can be volatile.
- Revenue growth of just +4.4% in FY2025 is modest for a company assigned to high-growth macro themes like AI Infrastructure and Semiconductors, suggesting the theme tailwind has not yet translated into accelerated financial results.
What Could Change the Picture
Bullish Triggers
- If the strong 2026Q2 trajectory — $7.91 billion in revenue and $2.81 billion in net income — continues, it would signal that the mid-cycle dip was temporary and that earnings growth is re-accelerating.
- A sustained increase in dividends per share beyond the FY2025 level of $1.78, supported by the low 19.8% payout ratio, would reinforce the dividend growth thesis.
Bearish Triggers
- If net income continues to decline on a full-year basis despite revenue growth, it would suggest margin compression is a structural rather than temporary issue.
- A reversal of the recent quarterly revenue acceleration — a return toward the 2025Q4 trough of $6.80 billion — would undermine the momentum case and raise questions about demand sustainability.
Risk Profile
Low RiskThe company held $36.3 billion in total assets in FY2025, providing a substantial balance sheet foundation, and quarterly operating income rebounded from a trough of $1.71 billion in 2025Q4 to $2.52 billion in 2026Q2, suggesting the business has resilience through short-term demand fluctuations.
This report is for educational and research purposes only. It does not constitute financial, investment, legal, or tax advice — always conduct your own due diligence before making investment decisions.