AMAT
Applied Materials
Semiconductors
★ Quality 65/100Price today
$560.45
what the market pays
Worth
$125.74
calculated cycle value
Price is 346% above its value
charlieapp.co
Price vs Intrinsic Value
The line is the price month by month; the green band marks when it's undervalued (−20% off value). When the price drops in there, the discount is real, not opinion.
Where does the value come from?
5-year cycle
Money made year by year
This business has cycles — good years and bad years. That's why we don't use just the last year.
We use the average of those 5 years as the base for the math — not the good year, not the bad year. That way the value reflects what the company makes steadily.
How many times the cash flow
Semiconductors · vs 11 peers
You pay 60.1x times this business's cash flow; its sector median is 58.2x.
78% above what Charlie thinks it's worth (13.4x) — you're overpaying, sector or no sector.
Why Overvalued?
The model estimates an intrinsic value of $125.74 per share. Today's price of $560.45 is 78% above the calculated value — the market is paying a premium over what the model sees as fair.
The price is 346% above the calculated value. You're paying more than it's worth.
Buying here lowers your expected return and wipes out the safety margin.
The next reasonable entry zone starts at $119.45.
At what price would buying make sense?
Entry zones
🟢 Undervalued
≤$100.59
-20% off Value
🟡 Discounted
≤$119.45
-5% off Value
🔴 Today
$560.45
-78% Valor
Overvalued
The market prices it too high versus what the business makes. Patience pays off here.
“Time is the friend of the wonderful company, the enemy of the mediocre.”
— Warren Buffett
Model updated · July 2026
The business
Sells the ovens where TSMC, Samsung, and Intel cook every chip.
Applied Materials makes the equipment that produces chips: deposition, etching, ion implantation, and inspection. It sells the machines to foundries like TSMC, Samsung, and Intel, then earns recurring revenue from service, parts, and software on the installed base. FY2025 revenue: $28.4B, with 49% gross margin.
It dominates critical process niches where a single mistake ruins an entire wafer, so customers don't switch suppliers lightly. The installed base generates recurring service revenue, and the accumulated know-how in materials physics is hard to copy. Even so, ASML controls advanced lithography, and Lam and Tokyo Electron fight for the rest: it's no monopoly.
Revenue history
From $25.8B to $29.8B in 4 years. The business grows steadily.
Where each $100 of sales goes
Revenue $28.4B · FY2025
Of every $100 in sales, $75 goes to costs and operations; $25 is left as net profit (25% margin).
Catalysts and risks
Spending on AI capacity: TSMC raised its 2025 capex toward ~$40B, and AMAT sells the tools.
Service business on the installed base grows double digits and smooths the cycle.
Transition to gate-all-around and HBM memory increases equipment intensity per wafer.
It's cyclical: a drop in foundry capex hits revenue fast.
China exposure (~30%+ of historical sales) under U.S. export restrictions.
Customer concentration: a few foundries decide a large share of demand.
Charlie's note
“At 13.4x you pay little for a business with a real moat, 49% gross margin, and recurring service on the installed base; the 5% growth is modest, but at that multiple they're not asking you to believe in miracles, just to be patient.”
Analysis · June 2026
So when would be a good price for Applied Materials?
By our calculation, not yet. We will email you the day it drops to $119.45 — so you do not have to keep checking.
🔔 Email meFree · no card
Charlie informs, it doesn't advise. No information should be taken as a recommendation to buy or sell.