Applied Materials AMAT shares have climbed 166.8% in a year, surpassing the Zacks Electronics - Semiconductors industry and Zacks Computer and Technology sector’s return of 91.8% and 43.5%, respectively.
AMAT Past 12-Month Performance Chart
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The rise in share price has led the stock to trade at a premium of 9.45X price-to-sales (P/S) multiple compared to the industry’s P/S multiple of 11.93X. AMAT’s premium valuation has been further implied by the Zacks Value Score of D.
AMAT Forward 12-Month (P/S) Valuation Chart
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Given the recent rise in stock price and the overvaluation, investors are wondering if this would be the right time to buy, sell or hold the stock. Let’s discuss the fundamentals and financials of the stock to uncover the next best move!
Here's a stronger, more current version that incorporates the latest earnings release, earnings call commentary and investor presentation.
AMAT Stock Driven by Traction in Logic, DRAM and Packaging
Applied Materials is emerging as one of the biggest beneficiaries of the AI-driven semiconductor investment cycle. The company expects leading-edge foundry, logic, DRAM and advanced packaging to be the fastest-growing wafer fabrication equipment (WFE) segments in 2026, with these three markets collectively accounting for more than 80% of industry WFE growth.
In logic semiconductors, Applied Materials is benefiting from major technology transitions, particularly the industry's migration from FinFET architectures to Gate-All-Around (GAA) transistors and the increasing adoption of backside power delivery. These transitions require significantly more materials engineering, deposition, etch and process-control steps, expanding Applied Materials' served market opportunity.
During the second quarter of fiscal 2026, the company introduced new products such as Trillium ALD and Precision Selective Nitride PECVD, which are designed to improve transistor performance, reduce power consumption and support advanced GAA manufacturing. Given the growth trend of AI infrastructure across the globe, AMAT is expected to continue to accelerate its footprint throughout 2026 and beyond.
AI workloads are driving unprecedented demand for high-bandwidth memory (HBM), prompting memory manufacturers to aggressively invest in advanced 6F² DRAM nodes while accelerating development of next-generation architectures. AMAT remains the leading process equipment supplier in memory, benefiting from strong positions in DRAM wiring, patterning and peripheral logic fabrication steps.
Advanced packaging represents another significant long-term growth driver. As AI processors become increasingly complex and heterogeneous, chipmakers are relying more heavily on 3D chiplet architectures, HBM integration and advanced packaging technologies to improve performance and energy efficiency. Applied Materials expects packaging revenues to grow more than 50% in 2026.
AMAT Strengthens Competitive Position With Broad Product Portfolio
A key competitive advantage for Applied Materials is its unmatched breadth across semiconductor manufacturing. Applied Materials offers solutions across deposition, materials engineering, etch, metrology, inspection, packaging and process integration, allowing customers to optimize manufacturing flows using a single vendor across multiple stages of production.
This broad portfolio positions the company to capture a larger share of customer spending as semiconductor manufacturing becomes increasingly materials-intensive while also keeping its competitors like KLA Corporation KLAC, Lam Research LRCX and Camtek CAMT at bay. The breadth of Applied Materials' portfolio also reduces its dependence on any single semiconductor technology cycle and supports stronger pricing power.
KLA Corporation remains a dominant player in process control, wafer inspection and yield management solutions, while Camtek focuses on semiconductor inspection, metrology, advanced packaging and high-performance computing applications. Lam Research competes with Applied Materials across deposition and etch technologies, including advanced atomic layer deposition systems used in leading-edge semiconductor manufacturing.
The favorable mix shift toward AI-driven markets is already translating into stronger financial performance. Applied Materials reported record fiscal second-quarter 2026 revenues of $7.91 billion, up 11% year over year, while non-GAAP earnings per share increased 20% to a record $2.86. The Zacks Consensus Estimate for fiscal 2026 earnings currently implies growth of 16.8%. The estimates have been revised upward in the past 30 days.
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Conclusion: Buy AMAT Stock Now
Applied Materials remains well-positioned to benefit from the AI-driven semiconductor spending cycle. Its leadership in logic, DRAM and advanced packaging, combined with its broad product portfolio and solid earnings outlook, supports sustained growth. The company’s diversification in product lines helps it stay competitive against KLA Corporation, Lam Research and Camtek. Given these dynamics, we will suggest investing in this Zacks Rank #2 (Buy) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).