As of January 31, 2026, Applied Materials Inc has a Discounted Cash Flow (DCF) derived fair value of $204.24 per share. With the current market price at $322.32, this represents a potential upside of -36.6%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $186.18 |
| DCF Fair Value (10-year) | $204.24 |
| Potential Upside (5-year) | -42.2% |
| Potential Upside (10-year) | -36.6% |
| Discount Rate (WACC) | 8.9% - 12.0% |
Revenue is projected to grow from $28368 million in 10-2025 to $45185 million by 10-2035, representing a compound annual growth rate of approximately 4.8%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 10-2025 | 28368 | 4% |
| 10-2026 | 29756 | 5% |
| 10-2027 | 31377 | 5% |
| 10-2028 | 32456 | 3% |
| 10-2029 | 34100 | 5% |
| 10-2030 | 36459 | 7% |
| 10-2031 | 38604 | 6% |
| 10-2032 | 39377 | 2% |
| 10-2033 | 40448 | 3% |
| 10-2034 | 43311 | 7% |
| 10-2035 | 45185 | 4% |
Net profit margin is expected to improve from 25% in 10-2025 to 40% by 10-2035, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 10-2025 | 6998 | 25% |
| 10-2026 | 9120 | 31% |
| 10-2027 | 10282 | 33% |
| 10-2028 | 11290 | 35% |
| 10-2029 | 12514 | 37% |
| 10-2030 | 14043 | 39% |
| 10-2031 | 15002 | 39% |
| 10-2032 | 15437 | 39% |
| 10-2033 | 15994 | 40% |
| 10-2034 | 17271 | 40% |
| 10-2035 | 18168 | 40% |
with a 5-year average of $1202 million. Projected CapEx is expected to maintain at approximately 4% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 10-2026 | 1336 |
| 10-2027 | 1461 |
| 10-2028 | 1531 |
| 10-2029 | 1599 |
| 10-2030 | 1475 |
| 10-2031 | 1555 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 72 |
| Days Inventory | 145 |
| Days Payables | 26 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 2026 | 10794 | 1368 | 1337 | (522) | 8611 |
| 2027 | 12199 | 1542 | 1410 | 361 | 8886 |
| 2028 | 13390 | 1693 | 1458 | 339 | 9900 |
| 2029 | 14810 | 1877 | 1532 | 158 | 11243 |
| 2030 | 16361 | 2106 | 1638 | 561 | 12057 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 186.18 | -42.2% |
| 10-Year DCF (Growth) | 204.24 | -36.6% |
| 5-Year DCF (EBITDA) | 288.23 | -10.6% |
| 10-Year DCF (EBITDA) | 287.66 | -10.8% |
Is Applied Materials Inc (AMAT) a buy or a sell? Applied Materials Inc is definitely a sell. Based on our DCF analysis, Applied Materials Inc (AMAT) appears to be overvalued with upside potential of -36.6%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider reducing exposure at the current market price of $322.32.