{"schemaVersion":1,"research":true,"symbol":"amat","name":"Applied Materials","topic":"moat","path":"/stock/amat/moat","status":"published","version":6,"updatedAt":"2026-10-19T16:35:45.134Z","locked":false,"publicFairValue":false,"fairValue":null,"moat":{"verdict":"narrow","summary":"Applied Materials has a narrow moat supported by specialized materials engineering capabilities and recurring equipment-service relationships. Multiyear service agreements, extended customer relationships and growing service and spares revenue demonstrate customer dependency. Reported selling-price increases across several years support realized pricing power. These results corroborate technical differentiation claims without establishing exceptional durability or superiority against specific competitors. Customer concentration, technology transitions and realized trade-compliance costs constrain the moat.","advantages":[{"mechanism":"switching_costs","claim":"Equipment support, spares, upgrades and multiyear service agreements create continuing customer relationships and likely switching friction. Demonstrated subscription revenue and extended relationships support this advantage, although replacement costs and customer-level renewal rates are undisclosed.","durability":"The fiscal 2025 performance discussion reports that more than two-thirds of AGS revenue came from long-term subscription agreements with an average contract length of 2.9 years. Service-agreement and spares growth continued through the first nine months of fiscal 2026. This supports current persistence, without guaranteeing future renewals.","risks":"Concentrated customers can exert bargaining pressure. Lower utilization, equipment reuse, order cancellations and restrictions on servicing customers can weaken demand. Fiscal 2025 AGS operating-margin deterioration demonstrates that recurring demand does not eliminate operating pressure.","invalidation":"The thesis would weaken materially if subscription penetration or average contract length declined persistently, major customers failed to extend relationships, or service and spares revenue fell despite a stable or expanding supported equipment base.","competitors":[],"evidenceIds":["e1","e2","e3","e4","e5","e6"],"counterEvidenceIds":["e7","e8","e9","e10"]},{"mechanism":"intangible_assets","claim":"Patents, know-how and a broad materials engineering portfolio support specialized equipment capabilities. Customer spending on technology transitions and repeated selling-price increases corroborate commercial value; management's claims of unique differentiation remain only partially demonstrated.","durability":"Technical capabilities and product development cycles of 12–36 months suggest replication takes investment and time. Pricing outcomes across fiscal 2022, 2023, 2025 and fiscal 2026 provide evidence of persistence, but the passages do not establish patent protection periods, durable market-share leadership or comparative performance.","risks":"Technology transitions can change purchasing decisions, and continued research spending is necessary. Intellectual-property enforcement and access to licenses remain risks. Trade restrictions have already affected the business, while government support for local competitors could accelerate erosion.","invalidation":"The thesis would weaken if Applied repeatedly lost technology-transition business, needed sustained price concessions to retain demand, or failed to protect or commercialize important technology despite continued development investment.","competitors":[],"evidenceIds":["e11","e12","e13","e14","e15","e16","e17","e18"],"counterEvidenceIds":["e19","e20","e21","e22"]}],"evidence":[{"id":"e1","sourceId":"filing-1","location":"Segment descriptions: AGS offerings","excerpt":"The AGS segment provides integrated solutions to optimize equipment and fab performance and productivity, including spares, upgrades, services, 200 millimeter and other equipment and factory automation software for semiconductor and other products."},{"id":"e2","sourceId":"filing-3","location":"Fiscal 2025 individual performance highlights: AGS subscriptions and contract duration","excerpt":"More than two-thirds of FY25 revenue was generated from long-term subscription agreements, which maintain desired average contract length of 2.9 years"},{"id":"e3","sourceId":"filing-3","location":"Fiscal 2025 individual performance highlights: backlog and customer relationships","excerpt":"Increased year-end backlog to approximately 7.1 billion, with new or extended relationships with top customers"},{"id":"e4","sourceId":"filing-1","location":"MD&A: fiscal 2025 AGS revenue drivers","excerpt":"Our AGS net revenue in fiscal 2025 increased compared to the prior year primarily due to higher customer spending on long-term service agreements and spares, partially offset by lower customer spending on 200mm equipment."},{"id":"e5","sourceId":"filing-2","location":"MD&A: fiscal 2026 AGS revenue drivers","excerpt":"Our AGS revenue increased in the three and nine months ended July 26, 2026 compared to the same periods in the prior year primarily due to higher long-term service agreement revenue and customer spending on spares."},{"id":"e6","sourceId":"filing-3","location":"Fiscal 2025 individual performance highlights: AGS results despite lower fab utilization","excerpt":"Delivered record Applied Global Services revenue of $6.4 billion and improved gross margin, despite lower customer fab utilization and ICAPS demand"},{"id":"e7","sourceId":"filing-1","location":"Segment information: fiscal 2025 customer concentration","excerpt":"During fiscal 2025, two customers accounted for approximately 19% and 15%, respectively, of our net revenue."},{"id":"e8","sourceId":"filing-2","location":"Risk factors: customer bargaining over commercial terms","excerpt":"Any changes impacting our customer concentration, deterioration in a customer’s financial condition or ability to perform its obligations, or efforts by a customer to obtain pricing, payment, intellectual property-related or other commercial terms that are less favorable to us, could have a material and adverse effect on our results of operations and financial condition."},{"id":"e9","sourceId":"filing-1","location":"MD&A: fiscal 2025 AGS operating-margin decline","excerpt":"AGS’ operating margin for fiscal 2025 decreased compared to the same periods in the prior year primarily due to a decrease in 200mm equipment net revenue, higher expense related to an increase in headcount to support business growth, and higher excess and obsolete inventory charges, partially offset by higher net revenue from services and spares."},{"id":"e10","sourceId":"filing-1","location":"Business: customer delivery delays and cancellation rights","excerpt":"Customers may delay delivery of products or cancel orders prior to shipment, subject to possible cancellation penalties."},{"id":"e11","sourceId":"filing-1","location":"Business: intellectual-property assets","excerpt":"In addition to our patents, we possess other intellectual property, including trademarks, know-how, trade secrets, and copyrights."},{"id":"e12","sourceId":"filing-3","location":"Business strategy: management's customer co-innovation description","excerpt":"We partner with our customers to see technology inflections early, and we focus our research and development on the most critical and valuable challenges on their roadmaps using high-velocity, co-innovation engagement models."},{"id":"e13","sourceId":"filing-3","location":"Business strategy: management's differentiation claim","excerpt":"We then create highly differentiated solutions by connecting our broad portfolio of capabilities and technologies."},{"id":"e14","sourceId":"filing-5","location":"MD&A: product development cycles","excerpt":"Development cycles range from 12 to 36 months depending on whether the product is an enhancement of an existing product, which typically has a shorter development cycle, or a new product, which typically has a longer development cycle."},{"id":"e15","sourceId":"filing-5","location":"MD&A: fiscal 2023 selling prices and gross-margin drivers","excerpt":"Gross margin in fiscal 2023 increased compared to fiscal 2022 primarily driven by favorable changes in customer and product mix and an increase in average selling prices, partially offset by higher material costs and inventory charges."},{"id":"e16","sourceId":"filing-5","location":"MD&A: fiscal 2022 selling prices and cost pressure","excerpt":"Gross margin in fiscal 2022 decreased compared to fiscal 2021 primarily driven by higher material, freight, and logistics costs and higher personnel costs due to an increase in headcount to provide manufacturing capacity and flexibility, partially offset by favorable changes in product mix and an increase in average selling prices."},{"id":"e17","sourceId":"filing-1","location":"MD&A: fiscal 2025 selling prices and gross-margin drivers","excerpt":"Gross margin increased primarily driven by higher net revenue, favorable changes in customer and product mix, an increase in average selling prices, and lower material and manufacturing costs."},{"id":"e18","sourceId":"filing-2","location":"MD&A: fiscal 2026 selling prices and gross-margin drivers","excerpt":"Gross margin in the three and nine months ended July 26, 2026 increased compared to the same periods in the prior year primarily driven by higher revenue, increases in average selling prices, and lower material and manufacturing costs."},{"id":"e19","sourceId":"filing-1","location":"Risk factors: continuing R&D and infrastructure requirements","excerpt":"Even during periods of economic uncertainty or lower demand, we must continue to invest in research and development and maintain a global business infrastructure to compete effectively and support our customers."},{"id":"e20","sourceId":"filing-1","location":"Business: intellectual-property disputes and licensing risks","excerpt":"If we are not able to resolve or settle claims, obtain necessary licenses on commercially reasonable terms, or successfully prosecute or defend our position, our business, financial condition and results of operations could be materially and adversely affected."},{"id":"e21","sourceId":"filing-1","location":"Risk factors: actual and potential trade-policy impacts","excerpt":"Global trade issues and changes in and uncertainties with respect to trade policies and export regulations, including import and export license requirements, trade sanctions, tariffs and international trade disputes, have adversely impacted and could further adversely impact our business and operations, and reduce the competitiveness of our products and services relative to local and global competitors."},{"id":"e22","sourceId":"filing-2","location":"Risk factors: policies favoring domestic competitors","excerpt":"These factors include global political and social conditions, such as policies or regulations within countries, including China, the United States and countries in Europe and Asia, that favor domestic companies or promote the development and growth of local competitors to us, or regarding national, commercial or security issues."},{"id":"e23","sourceId":"filing-2","location":"MD&A: fiscal 2026 revenue and operating results","excerpt":"The following table presents certain significant measurements for the periods presented: Three Months Ended Nine Months Ended July 26, 2026 July 27, 2025 Change July 26, 2026 July 27, 2025 Change (In millions, except per share amounts and percentages) Revenue $ 9,115 $ 7,302 $ 1,813 $ 24,037 $ 21,568 $ 2,469 Gross margin 50.3 % 48.8 % 1.5 points 49.8 % 48.9 % 0.9 points Operating income $ 3,075 $ 2,233 $ 842 $ 7,429 $ 6,577 $ 852 Operating margin 33.7 % 30.6 % 3.1 points 30.9 % 30.5 % 0.4 points Net income $ 2,538 $ 1,779 $ 759 $ 7,370 $ 5,101 $ 2,269 Earnings per diluted share $ 3.17 $ 2.22 $ 0.95 $ 9.22 $ 6.29 $ 2.93 Revenue Revenue by segment for the periods presented was as follows: Three Months Ended Nine Months Ended July 26, 2026 July 27, 2025 Change July 26, 2026 July 27, 2025 Change (In millions, except percentages) Semiconductor Systems $ 7,040 77 % $ 5,564 76 % 27 % $ 18,146 75 % $ 16,562 77 % 10 % Applied Global Services 1,781 20 % 1,463 20 % 22 % 5,005 21 % 4,236 20 % 18 % Other 294 3 % 275 4 % 7 % 886 4 % 770 3 % 15 % Total $ 9,115 100 % $ 7,302 100 % 25 % $ 24,037 100 % $ 21,568 100 % 11 % Revenue for Semiconductor Systems by market for the periods presented was as follows: Three Months Ended Nine Months Ended July 26, 2026 July 27, 2025 July 26, 2026 July 27, 2025 Foundry, logic and other 67 % 69 % 65 % 68 % Dynamic random-access memory (DRAM) 26 % 22 % 29 % 25 % Flash memory (NAND) 7 % 9 % 6 % 7 % 100 % 100 % 100 % 100 % Revenue in the three and nine months ended July 26, 2026 increased compared to the same periods in the prior year."},{"id":"e24","sourceId":"filing-2","location":"MD&A: leading-edge manufacturing demand","excerpt":"The increase in foundry and logic customers’ spending for the three and nine months ended July 26, 2026 reflected stronger demand for leading-edge manufacturing technologies."},{"id":"e25","sourceId":"filing-2","location":"MD&A: fiscal 2026 segment operating results","excerpt":"37 Table of Contents Segment Operating Income (Loss) Operating income (loss) by segment for the periods presented was as follows: Three Months Ended Nine Months Ended July 26, 2026 July 27, 2025 Change July 26, 2026 July 27, 2025 Change (In millions, except percentages and ratios) Operating income (loss) Semiconductor Systems $ 2,657 $ 1,837 $ 820 45 % $ 6,176 $ 5,479 $ 697 13 % Applied Global Services 536 400 136 34 % 1,461 1,114 347 31 % Other (118) (4) (114) NM* (208) (16) (192) NM* Total $ 3,075 $ 2,233 $ 842 $ 7,429 $ 6,577 $ 852 Operating margin Semiconductor Systems 37.7 % 33.0 % 4.7 points 34.0 % 33.1 % 0.9 points Applied Global Services 30.1 % 27.3 % 2.8 points 29.2 % 26.3 % 2.9 points ________________________ *Not meaningful Semiconductor Systems’ operating margin for the three months ended July 26, 2026 increased compared to the same period in the prior year primarily driven by higher revenue, favorable changes in product mix, increases in average selling prices and lower material and manufacturing costs, partially offset by increased RD&E expenses."},{"id":"e26","sourceId":"filing-2","location":"Segment information: fiscal 2026 R&D, capital expenditures and legal settlement","excerpt":"28 APPLIED MATERIALS, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (Continued) Information for each reportable segment for and as of the end of each reporting period was as follows: Semiconductor Systems Applied Global Services Other Total (In millions, except percentages) Three Months Ended July 26, 2026 Revenue $ 7,040 $ 1,781 $ 294 $ 9,115 Cost of products sold 3,148 1,147 234 4,529 Gross profit $ 3,892 $ 634 $ 60 $ 4,586 Gross margin 55.3 % 35.6 % 50.3 % Operating expenses: Research, development and engineering 907 31 162 1,100 Selling, general and administrative 328 67 16 411 Operating income (loss) $ 2,657 $ 536 $ (118) $ 3,075 Operating margin 37.7 % 30.1 % 33.7 % Depreciation and amortization $ 105 $ 17 $ 29 $ 151 Capital expenditures $ 171 $ 34 $ 502 $ 707 Balance as of July 26, 2026 Accounts receivable $ 6,146 $ 1,348 $ 197 $ 7,691 Inventories $ 4,408 $ 1,906 $ 250 $ 6,564 Goodwill $ 2,691 $ 983 $ 199 $ 3,873 Semiconductor Systems Applied Global Services Other Total (In millions, except percentages) Nine Months Ended July 26, 2026 Revenue $ 18,146 $ 5,005 $ 886 $ 24,037 Cost of products sold 8,196 3,257 616 12,069 Gross profit $ 9,950 $ 1,748 $ 270 $ 11,968 Gross margin 54.8 % 34.9 % 49.8 % Operating expenses: Research, development and engineering 2,570 69 416 3,055 Selling, general and administrative 951 218 50 1,219 Legal settlement 253 — — 253 Restructuring charges — — 12 12 Operating income (loss) $ 6,176 $ 1,461 $ (208) $ 7,429 Operating margin 34.0 % 29.2 % 30.9 % Depreciation and amortization $ 287 $ 47 $ 79 $ 413 Capital expenditures $ 367 $ 58 $ 1,563 $ 1,988 29 APPLIED MATERIALS, INC."},{"id":"e27","sourceId":"filing-2","location":"MD&A: export-controls settlement and operating-margin drivers","excerpt":"Semiconductor Systems’ operating margin for the nine months ended July 26, 2026 increased compared to the same period in the prior year primarily driven by higher revenue, increases in average selling prices and lower material and manufacturing costs, partially offset by increased RD&E expenses and a legal settlement charge related to a previously disclosed export controls compliance matter."},{"id":"e28","sourceId":"filing-3","location":"Appendix A: fiscal 2025 operating cash flow and capital expenditures","excerpt":"Fiscal Year 2025 2024 2023 2022 2021 (In millions, except percentages) Expected Return Total assets at the end of the prior fiscal year $34,409 $30,729 $26,726 $25,825 $22,353 Total equity investments at the end of the prior fiscal year (1,014 ) (958 ) (771 ) (687 ) (184 ) Total current liability at the end of the prior fiscal year (8,468 ) (7,372 ) (7,379 ) (6,344 ) (4,459 ) Beginning Invested Capital 24,927 22,399 18,576 18,794 17,710 WACC 13.0 % 12.1 % 13.5 % 11.0 % 12.6 % Expected Return $ 3,240 $ 2,710 $ 2,508 $ 2,067 $ 2,231 Fiscal Year 2025 (In millions, except percentage) Non-GAAP Free Cash Flow Cash provided by operating activities $ 7,958 Capital expenditures (2,260 ) Non-GAAP free cash flow $ 5,698 Free cash flow margin 20 % Use of Non-GAAP Financial Measures Management uses non-GAAP financial measures to evaluate the Company’s operating and financial performance and for planning purposes, and as performance measures in its executive compensation program."},{"id":"e29","sourceId":"filing-1","location":"Stockholders' equity: actual annual repurchases","excerpt":"The following table summarizes our stock repurchases, including and excluding excise tax, for each fiscal year: 2025 2024 2023 (In millions, except per share amounts) Shares of common stock repurchased 30 20 18 Cost of stock repurchased (including excise tax)* $ 4,893 $ 3,851 $ 2,202 Average price paid per share (including excise tax)* $ 162.85 $ 190.27 $ 123.63 Cost of stock repurchased (excluding excise tax) $ 4,853 $ 3,823 $ 2,189 Average price paid per share (excluding excise tax) $ 161.54 $ 188.87 $ 122.89 (*) Stock repurchase amounts include the 1% surcharge on stock repurchases under the Inflation Reduction Act’s excise tax."},{"id":"e30","sourceId":"filing-1","location":"Stockholders' equity: fiscal 2025 declared dividends","excerpt":"NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Dividends During fiscal 2025, our Board of Directors declared one quarterly cash dividend of $0.40 per share and three quarterly cash dividends of $0.46 per share."},{"id":"e31","sourceId":"filing-3","location":"Appendix A: multiyear economic profit, impairments and restructuring","excerpt":"Fiscal Year 2025 2024 2023 2022 2021 (In millions, except percentages) Non-GAAP Operating Income and Non-GAAP Economic Profit1 GAAP reported operating income $ 8,289 $ 7,867 $ 7,654 $ 7,788 $ 6,889 Certain items associated with acquisitions2 45 42 43 39 47 Acquisition integration and deal costs 6 12 22 38 45 Impairment of goodwill and other long-lived assets 41 3 — — — Certain incremental expenses related to COVID-193 — — — — 24 Severance and related charges4 — — — (4 ) 157 Deal termination fee — — — — 154 Restructuring charges5 181 — — — — Other charges — — — — 6 Non-GAAP operating income $ 8,562 $ 7,924 $ 7,719 $ 7,861 $ 7,322 Non-GAAP operating margin 30.2 % 29.2 % 29.1 % 30.5 % 31.7 % Income taxes on Non-GAAP operating income6 (1,079 ) (951 ) (934 ) (928 ) (842 ) Non-GAAP operating income after tax $ 7,483 $ 6,973 $ 6,785 $ 6,933 6,480 Expected Return1,7 (3,240 ) (2,710 ) (2,508 ) (2,067 ) (2,231 ) Non-GAAP economic profit1 $ 4,243 $ 4,263 $ 4,277 $ 4,866 $ 4,249 1 Non-GAAP economic profit is calculated as the Company’s net operating profit (which we report as non-GAAP operating income) after tax minus the expected return on the Company’s invested capital (“Expected Return”)."},{"id":"e32","sourceId":"filing-3","location":"Executive compensation: actual fiscal 2025 CEO pay composition","excerpt":"In fiscal 2025, 96% of our CEO’s compensation comprised variable compensation elements, and 91% of his overall compensation was delivered in equity with multi-year vesting."},{"id":"e33","sourceId":"filing-3","location":"Executive compensation: unchanged incentive goals and results","excerpt":"No adjustments were made to the performance goals or to the Company’s results used to determine incentive payouts under either the annual incentive program or the multi-year incentive program."},{"id":"e34","sourceId":"filing-3","location":"Executive compensation: actual fiscal 2025 bonus payouts","excerpt":"Reflecting our record financial performance and significant individual contributions by the NEOs, bonus payouts for our NEOs were, on average, approximately 95.1% of target bonus amounts."},{"id":"e35","sourceId":"filing-3","location":"Executive compensation: actual vesting of fiscal 2023 performance awards","excerpt":"The results for this three-year performance period significantly exceeded target performance levels, resulting in above-target vesting of performance share unit (“PSU”) awards granted to our executive officers in fiscal 2023."},{"id":"e36","sourceId":"filing-3","location":"Compensation policies: ownership-related restrictions on share sales","excerpt":"The guidelines provide that officers may not sell any shares of Applied stock if their ownership is, or following the sale would fall, below the following ownership levels:"},{"id":"e37","sourceId":"filing-3","location":"Board leadership: current independent chair","excerpt":"Mr. Iannotti, an independent director, currently serves as the Chair of the Board."},{"id":"e38","sourceId":"filing-3","location":"Governance highlights: shareholder rights and board practices","excerpt":"Governance Highlights Annual Election of Directors Independent Chair of the Board Highly Independent Board (9 of 10 Director nominees) and Committees Annual Board, Committee and Individual Evaluations Robust Board Succession Planning Active Shareholder Engagement Practices Shareholder Right to Call a Special Meeting Shareholder Right to Act by Written Consent Shareholder Proxy Access No Poison Pill No Supermajority Vote Requirements Majority Voting for Directors Regular Executive Sessions of Independent Directors Stock Ownership Guidelines for Directors and Executives Clawback Policy for Annual and Long-Term Incentive Plans iv | APPLIED MATERIALS, INC."},{"id":"e39","sourceId":"filing-3","location":"Compensation policies: adopted recovery policy coverage","excerpt":"The Recovery Policy applies to incentive-based compensation that is received by the Section 16 officer on or after October 2, 2023 and during the three fiscal years that ended immediately before the Company determines that it is required to restate its financial statements, and that is granted, earned or vested based wholly or in part on the achievement of any financial reporting measure or based on the Company’s stock price."},{"id":"e40","sourceId":"filing-3","location":"Executive compensation: adopted fiscal 2025 PSU economic-profit measure","excerpt":"2026 PROXY STATEMENT | vii Table of Contents Proxy Statement Summary payout would be based on the Company’s cumulative three-year non-GAAP economic profit result compared to pre-established goals, rather than on non-GAAP operating margin."},{"id":"completion-76f93fe8cbb7-e1","sourceId":"filing-2","location":"Risk disclosure concerning customer commercial terms","excerpt":"Any changes impacting our customer concentration, deterioration in a customer’s financial condition or ability to perform its obligations, or efforts by a customer to obtain pricing, payment, intellectual property-related or other commercial terms that are less favorable to us, could have a material and adverse effect on our results of operations and financial condition."},{"id":"completion-76f93fe8cbb7-e2","sourceId":"filing-2","location":"Performance Obligations","excerpt":"Performance Obligations\nAs of July 26, 2026, the amount of remaining unsatisfied performance obligations on contracts, primarily consisting of written purchase orders received from customers, with an original estimated duration of one year or more was approximately $1.0 billion, of which approximately 73% is expected to be recognized within 12 months and the remainder is expected to be recognized within the following 24 months thereafter."},{"id":"completion-76f93fe8cbb7-e3","sourceId":"filing-2","location":"Performance Obligations practical expedient","excerpt":"We have elected the available practical expedient to exclude the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less."},{"id":"completion-76f93fe8cbb7-e4","sourceId":"filing-2","location":"Gross margin discussion","excerpt":"Gross margin in the three and nine months ended July 26, 2026 increased compared to the same periods in the prior year primarily driven by higher revenue, increases in average selling prices, and lower material and manufacturing costs."},{"id":"completion-7a7d7fbdbab7-e1","sourceId":"filing-2","location":"Risk factors—customer concentration and commercial terms","excerpt":"Any changes impacting our customer concentration, deterioration in a customer’s financial condition or ability to perform its obligations, or efforts by a customer to obtain pricing, payment, intellectual property-related or other commercial terms that are less favorable to us, could have a material and adverse effect on our results of operations and financial condition."},{"id":"completion-7a7d7fbdbab7-e2","sourceId":"filing-2","location":"Notes to consolidated condensed financial statements—Performance Obligations","excerpt":"Performance Obligations\nAs of July 26, 2026, the amount of remaining unsatisfied performance obligations on contracts, primarily consisting of written purchase orders received from customers, with an original estimated duration of one year or more was approximately $1.0 billion, of which approximately 73% is expected to be recognized within 12 months and the remainder is expected to be recognized within the following 24 months thereafter."},{"id":"completion-dd9c2277dee3-e1","sourceId":"filing-1","location":"Payment Terms","excerpt":"Payment Terms. Payment terms vary by contract."},{"id":"completion-dd9c2277dee3-e2","sourceId":"filing-2","location":"Risk factors: potential customer pressure on commercial terms","excerpt":"Any changes impacting our customer concentration, deterioration in a customer’s financial condition or ability to perform its obligations, or efforts by a customer to obtain pricing, payment, intellectual property-related or other commercial terms that are less favorable to us, could have a material and adverse effect on our results of operations and financial condition."},{"id":"completion-dd9c2277dee3-e3","sourceId":"filing-2","location":"Gross margin discussion","excerpt":"Gross margin in the three and nine months ended July 26, 2026 increased compared to the same periods in the prior year primarily driven by higher revenue, increases in average selling prices, and lower material and manufacturing costs."},{"id":"completion-dd9c2277dee3-e4","sourceId":"filing-10","location":"Sales terms, section 3 reviewed fragment","excerpt":"which may include Price adjustments."}],"changes":["Retain the previous narrow verdict; the supplied proxy adds concrete support through AGS subscription penetration, 2.9-year average contract duration and extended customer relationships.","Broaden pricing evidence to reported selling-price increases in fiscal 2022 and 2023 as well as fiscal 2025 and 2026.","Add assessments of actual compensation, incentive payouts, governance practices, capital spending and cash generation; distinguish these disclosures from proposals and management aspirations."],"limitations":["All supplied evidence is issuer disclosure. Operating results and contractual facts support numerical grades, but management's leadership and differentiation assertions do not independently establish superiority.","No supplied passage identifies a specific equipment competitor as such. Names appearing in director biographies, financing or compensation-peer descriptions do not establish product-market competition; competitor arrays therefore remain empty.","Switching costs, customer-level renewal rates, comparative tool performance and market-share trends are unquantified. Subscription growth demonstrates repeat demand without proving every customer is locked in.","Average selling-price increases are disclosed without a like-for-like price series or quantified separation of product configuration effects. Revenue-allocation accounting does not establish unilateral pricing authority.","The proxy discloses ownership guidelines and compensation arrangements, but the supplied passages omit actual executive ownership balances and complete incentive thresholds.","Source dates are filing dates with dateKind filed. Fiscal 2026 evidence covers interim periods through July 26, 2026, rather than a completed fiscal year."],"qualityAssessments":[{"category":"moat","checks":[{"criterion":"structural_advantage","grade":3,"rationale":"Specialized intellectual property and equipment support relationships are corroborated by substantial multiyear subscription revenue and realized pricing increases. Comparative technical superiority remains unproven.","evidenceIds":["e1","e2","e11","e17","e18"]},{"criterion":"durability","grade":2,"rationale":"Multiyear service commitments and repeated pricing outcomes demonstrate persistence, but short product development cycles and continuing R&D requirements leave the advantage dependent on successful innovation.","evidenceIds":["e2","e14","e15","e16","e17","e18","e19"]},{"criterion":"customer_dependency","grade":3,"rationale":"More than two-thirds subscription penetration within the AGS performance discussion, extended relationships and continued service and spares growth demonstrate repeat demand. Switching friction is inferred; no renewal rate or replacement-cost estimate is disclosed.","evidenceIds":["e1","e2","e3","e4","e5"]},{"criterion":"erosion_resilience","grade":2,"rationale":"Service growth despite lower utilization and expanding fiscal 2026 activity show resilience. Actual trade impacts, concentrated customers and fiscal 2025 service-margin pressure prevent a stronger durability assessment.","evidenceIds":["e6","e7","e9","e21","e23"]}]},{"category":"pricing_power","checks":[{"criterion":"realized_pricing","grade":3,"rationale":"Reported average selling-price increases contributed to results in fiscal 2022, 2023, 2025 and fiscal 2026. This is demonstrated pricing evidence, although the passages do not quantify like-for-like increases or isolate configuration effects.","evidenceIds":["e15","e16","e17","e18"]},{"criterion":"retention","grade":3,"rationale":"Multiyear subscriptions, new or extended top-customer relationships and growing service-agreement and spares revenue demonstrate continuing demand. Assessment uses contractual and aggregate operating evidence rather than a disclosed customer renewal rate.","evidenceIds":["e2","e3","e4","e5"]},{"criterion":"margin_resilience","grade":2,"rationale":"Fiscal 2026 consolidated and segment margins improved alongside higher prices and lower costs. Fiscal 2022 cost pressure and fiscal 2025 AGS margin deterioration show incomplete protection; mix and volume also influence the results.","evidenceIds":["e9","e16","e18","e23","e25"]},{"criterion":"contractual_freedom","grade":null,"rationale":"Customer cancellation rights and possible pressure on commercial terms are disclosed, but price-reset clauses, escalation rights and service-contract repricing provisions are absent. These passages cannot establish the extent of pricing discretion.","evidenceIds":["e8","e10"]}]},{"category":"strong_management","checks":[{"criterion":"capital_discipline","grade":2,"rationale":"Fiscal 2025 operating cash flow of $7.958 billion funded $2.260 billion of capital expenditures and substantial repurchases, with dividends also declared. Positive but broadly flat economic profit, restructuring and impairments make outcomes mixed. Fiscal 2026 investment spending is documented, but its ultimate returns and repurchase valuation quality are unestablished.","evidenceIds":["e26","e28","e29","e30","e31"]},{"criterion":"incentive_alignment","grade":3,"rationale":"Actual CEO compensation emphasized variable pay and multiyear equity. Bonuses paid below target, prior performance awards vested above target, and goals were not adjusted. Ownership-related sale restrictions and an adopted economic-profit measure further support alignment; actual ownership balances and full payout sensitivity are missing.","evidenceIds":["e32","e33","e34","e35","e36","e40"]},{"criterion":"execution","grade":3,"rationale":"Service growth despite lower utilization and fiscal 2026 revenue and operating-income growth demonstrate execution while supporting technology-transition demand. This assessment uses operating outcomes indirectly attributable to management; industry demand contributed, and the realized export-controls settlement is a material blemish.","evidenceIds":["e5","e6","e23","e24","e27"]},{"criterion":"governance","grade":2,"rationale":"An existing independent chair, disclosed shareholder rights and an adopted compensation-recovery policy support oversight. The realized export-controls settlement qualifies effectiveness. 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