Value
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.0 |
| P/S | 3.7 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 6.4 |
| PEG | 8.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 20.2x
- ▸PEG: 0.83
AMAT · Why this verdict
Why Applied Materials (AMAT) is rated BUY WAIT
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictBUY WAIT
Overall score6.2/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Applied Materials is a wide-moat, 30%-margin semiconductor equipment maker with 25% growth, a 0.83 PEG and 48% upside to the analyst target, but the stock is 47% off its high in a pullback and 89% of revenue is international.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue is growing about 25% YoY and the growth score is 9.3 out of 10. Growth breakdown | Revenue growth stays above 15% YoY. | →Stable |
| CounterEquipment demand is tied to chip-maker spending and can reverse quickly. | ||
Forward P/E of 21.0x with a PEG of 0.83 is reasonable against growth. Valuation breakdown | Forward P/E stays below 25x. | →Stable |
| CounterPeak-cycle earnings could make the forward multiple look cheaper than it is. | ||
89% of revenue is international and a single qualified supplier supplies key parts, creating geographic and supply risk. Bear case | International share and supplier dependence do not cause disruption. | ↑Improving |
| CounterTrade restrictions or a supplier failure could hit a large share of sales. | ||
Return on equity of 41%, margins of 30% and a wide economic moat mark a high-quality business. Quality breakdown | Margins stay above 25% over 12 months. | →Stable |
| CounterFree cash flow is only 33% of net income, a quality red flag. | ||
The analyst target of $577.34 is 48.0% above the $390.09 price with a reward-to-risk of 4.2. Targets | Price moves toward the target as the pullback ends. | →Stable |
| CounterThe stock is 47% below its high with RSI of 25, so the downtrend may extend. | ||
Revenue is growing about 25% YoY and the growth score is 9.3 out of 10.
→StableGrowth breakdown
- Expectation
- Revenue growth stays above 15% YoY.
CounterEquipment demand is tied to chip-maker spending and can reverse quickly.
Forward P/E of 21.0x with a PEG of 0.83 is reasonable against growth.
→StableValuation breakdown
- Expectation
- Forward P/E stays below 25x.
CounterPeak-cycle earnings could make the forward multiple look cheaper than it is.
89% of revenue is international and a single qualified supplier supplies key parts, creating geographic and supply risk.
↑ImprovingBear case
- Expectation
- International share and supplier dependence do not cause disruption.
CounterTrade restrictions or a supplier failure could hit a large share of sales.
Return on equity of 41%, margins of 30% and a wide economic moat mark a high-quality business.
→StableQuality breakdown
- Expectation
- Margins stay above 25% over 12 months.
CounterFree cash flow is only 33% of net income, a quality red flag.
The analyst target of $577.34 is 48.0% above the $390.09 price with a reward-to-risk of 4.2.
→StableTargets
- Expectation
- Price moves toward the target as the pullback ends.
CounterThe stock is 47% below its high with RSI of 25, so the downtrend may extend.
Per-dimension breakdown
Quality
8.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 10.0 |
| Gross margin | 5.9 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 8.3 |
| FCF quality | 2.7 |
| Moat | 8.2 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 41%
- ▸Strong margins: 30%
- ▸Earnings quality RED FLAG: 33% FCF/NI
- ▸Wide economic moat
Growth
9.3/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 8.7 |
| EPS growth | 10.0 |
- ▸Strong growth: 25% YoY
Momentum
1.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 1.7 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+6.4%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 4.1 |
| Analyst rating | 9.0 |
| Price target | 9.8 |
- ▸Analyst upside: 64%
Insider
4.1/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 4.3 |
| notable moves | 3.0 |
- ▸Negligible insider selling — $4,454,183 (0.001% of mkt cap)
Peer rank
5.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.0 |
| quality rank | 8.1 |
| growth rank | 4.6 |
- ▸Best-in-class margins
Technical
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.3 |
| support resistance | 9.4 |
| 52w position | 0.3 |
| gap | 4.0 |
Risk (lower is worse)
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.1 |
| days to cover | 8.7 |
| volatility | 0.0 |
| put call | 4.3 |
| implied vol | 0.2 |
| max pain risk | 3.0 |
| beta | 4.4 |
| debt equity | 8.9 |
- ▸High IV: 79%
- ▸Above max pain $275
- ▸Concentration risks: 2 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 5.5 |
| dividend safety | 6.2 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/0M
- ▸Earnings in 9 days
How the verdict was assembled
Engine trigger
Growth is cheap relative to earnings, but the technical setup has not yet produced a breakout above resistance (PEG 0.83, quality 8.2/10, growth 9.3/10).
Engine technical detail
verdict_path:
L4:PATH_C2_GARP_WAIT|ENTRY_STICKY:WITHIN_BANDPassed (5)
- ASYMMETRY:4.7>=1.5
- INSIDER:OK
- 8K:CLEAN
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- MOMENTUM:1.7<4.5
Warning (1)
- EARNINGS_PROXIMITY:9d<=14d (soft)
Reward-to-Risk
4.70
Upside
+51.0%
Downside
10.9%
Sizing output
STARTER
Setup— — No clear chart pattern; technical signals are mixed
EdgeTemporary headwind — High quality (8.2) with weak momentum (1.7)
SuitabilitySpeculative — Drawdown -48% (>40% off 52w high)
Investment implication
The C-path quality+growth combination triggered the STRONG_BUY_WAIT verdict: quality 8.2 and growth 9.3 both clear their thresholds, with asymmetric R:R of 4.70 supporting the read.
The strongest dimensions are Growth at 9.3, Quality at 8.2, and Sentiment at 7.6; the weakest are Momentum at 1.7, Insider at 4.1, and Risk (lower is worse) at 4.8. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 4.70 and an engine sizing output of STARTER.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1High Return Wide Moat
Trip ifNet margin falls below 20% from about 30%.
- P2Strong Growth
Trip ifRevenue growth falls below 8% YoY for 2 consecutive quarters.
- P3Analyst Target Upside
Trip ifAnalyst upside to target falls below 15% from current 48.0%.
- P4Reasonable Growth Valuation
Trip ifForward P/E rises above 30x.
- P5International Supplier Concentration
Trip ifInternational share of revenue exceeds 93%.