Applied Materials
A materials‑engineering tollbooth with scale, cash, and secular AI tailwinds
Applied Materials is the largest, most diversified supplier of wafer fabrication equipment and services. Its breadth across deposition, etch, CMP, metrology and advanced packaging, coupled with a vast installed base and software‑enabled service relationships, gives the company durable switching costs and scale advantages.
Recent product platforms like Vistara and Sculpta extend its leadership into angstrom‑era patterning and help customers address cost, cadence and sustainability constraints at advanced nodes. Financially, Applied combines high margins with a fortress balance sheet and strong free cash flow.
Trailing‑twelve‑month free cash flow is about 5.82 billion dollars on roughly 28.6 billion dollars of TTM sales, with cash and investments of 11.1 billion dollars versus total debt near 6.3 billion dollars as of July 27, 2025. Capital returns remain disciplined: the board lifted the dividend in March 2025 and added a fresh 10 billion dollar repurchase authorization, on top of ongoing buybacks.
Execution is strong, but near‑term visibility is tempered by U.S. export controls and softer China demand; management recently flagged incremental licensing and tariff uncertainty and a potential 600 million dollar revenue impact in fiscal 2026 from expanded curbs.
Applied Materials a-t-elle un rempart concurrentiel (moat) solide ?
Applied’s competitive edge stems from installed base density, proprietary process know‑how embedded in customers’ recipes, and platform breadth that lets it co‑optimize steps across deposition, etch, cleans, CMP and metrology. This creates high switching costs because qualifying alternative tools risks yield, throughput and production schedules.
Scale enables outsized R&D and a broad chamber library; Vistara increases configuration flexibility and AI‑enabled optimization, while Sculpta adds a new lever in EUV era patterning. These reinforce intangible assets and cost advantages.
Risks to the moat include faster improvement by Chinese toolmakers in etch and deposition and regulatory constraints that could slow adoption or service activity in China.
Applied Materials a-t-elle un pricing power dans son secteur ?
Evidence of pricing power includes sustained high gross and operating margins at scale and management’s note that Semiconductor Systems margins benefited from favorable mix and higher average selling prices in Q3 FY25. However, competition in specific steps and export licensing adds friction to across‑the‑board price increases.
Overall, Applied can price for value on enabling tools and integrated solutions, but not with monopoly‑like latitude.
Quelle est la prévisibilité de l'activité de Applied Materials ?
The company operates in a cyclical WFE market, but predictability is improved by a growing, higher‑margin services layer (AGS) tied to the installed base and by secular drivers (AI, high‑performance compute, advanced packaging, ICAPS nodes) that support multi‑year demand.
Still, quarterly cadence is affected by foundry/memory spending cycles and policy risk. Guidance commentary and recent press highlight reduced visibility tied to China.
Applied Materials est-elle financièrement solide ?
As of July 27, 2025, Applied held about 11.1 billion dollars in cash and investments against roughly 6.26 billion dollars total debt, implying net cash near 4.9 billion dollars. TTM operating cash flow is ~7.7 billion dollars with TTM capex ~1.88 billion dollars, yielding TTM free cash flow of ~5.82 billion dollars.
The company opportunistically refinanced and extended its debt maturities in September 2025. Balance sheet strength and cash generation provide ample cushion for downturns.
Quelle est l'efficacité de la stratégie d'allocation de capital de Applied Materials ?
Capital deployment is balanced: heavy reinvestment in R&D and platforms, consistent buybacks, and a growing dividend. In March 2025, the board approved a 15 percent dividend increase and an additional 10 billion dollar repurchase authorization. Nine‑month FY25 buybacks totaled about 4.0 billion dollars.
Applied also made a strategic 9 percent investment in BESI to strengthen its position in hybrid bonding and advanced packaging. Discipline is evident in avoiding large, high‑risk M&A after prior regulatory hurdles.
Applied Materials a-t-elle une direction de haute qualité ?
CEO Gary Dickerson (since 2013) and CFO Brice Hill have steered the company through multiple cycles while expanding margins, services mix, and the product portfolio. Governance and disclosure are robust via regular 10‑Q/10‑K detail and 8‑K updates.
Management acknowledges policy‑driven uncertainty and communicates expected revenue impacts from export curbs. While not founder‑led, execution quality and capital discipline score well.
Applied Materials est-elle une entreprise de qualité ?
Applied Materials est une entreprise de qualité a good avec un score de qualité de 86/100
- Multiple moats: installed base and process recipes create switching costs; breadth and scale lower cost; integrated platforms (Vistara, Sculpta) deepen customer lock‑in at advanced nodes.
- Cash‑rich and resilient: net cash roughly 4.9 billion dollars; TTM FCF about 5.82 billion dollars despite industry cyclicality.
- Recurring and less cyclical layer: services (AGS) ~22 percent of revenue with attractive margins and growing long‑term service agreements.
- Real risks in China: country exposure was 35 percent of Q3 revenue; new export curbs projected to trim 2026 revenue by ~600 million dollars.
- Shareholder‑friendly capital allocation with rising dividend and sizable repurchase capacity.
Quelle est le prix juste de l'action Applied Materials ?
Applied Materials est-elle un bon investissement à $299 ?
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