As of June 1, 2025, Applied Materials Inc has a Discounted Cash Flow (DCF) derived fair value of $208.44 per share. With the current market price at $156.75, this represents a potential upside of 33.0%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $167.41 |
| DCF Fair Value (10-year) | $208.44 |
| Potential Upside (5-year) | 6.8% |
| Potential Upside (10-year) | 33.0% |
| Discount Rate (WACC) | 9.6% - 13.1% |
Revenue is projected to grow from $27176 million in 10-2024 to $56487 million by 10-2034, representing a compound annual growth rate of approximately 7.6%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 10-2024 | 27176 | 2% |
| 10-2025 | 29034 | 7% |
| 10-2026 | 31261 | 8% |
| 10-2027 | 33840 | 8% |
| 10-2028 | 36087 | 7% |
| 10-2029 | 39392 | 9% |
| 10-2030 | 41817 | 6% |
| 10-2031 | 45821 | 10% |
| 10-2032 | 50154 | 9% |
| 10-2033 | 54124 | 8% |
| 10-2034 | 56487 | 4% |
Net profit margin is expected to improve from 26% in 10-2024 to 38% by 10-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 10-2024 | 7177 | 26% |
| 10-2025 | 8237 | 28% |
| 10-2026 | 9547 | 31% |
| 10-2027 | 11032 | 33% |
| 10-2028 | 12472 | 35% |
| 10-2029 | 14347 | 36% |
| 10-2030 | 15378 | 37% |
| 10-2031 | 17011 | 37% |
| 10-2032 | 18793 | 37% |
| 10-2033 | 20467 | 38% |
| 10-2034 | 21552 | 38% |
with a 5-year average of $835 million. Projected CapEx is expected to maintain at approximately 3% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 10-2025 | 947 |
| 10-2026 | 1025 |
| 10-2027 | 1097 |
| 10-2028 | 1121 |
| 10-2029 | 1150 |
| 10-2030 | 1237 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 79 |
| Days Inventory | 148 |
| Days Payables | 42 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 6M/2025 | 5057 | 618 | 492 | 575 | 3372 |
| 2026 | 11676 | 1432 | 1060 | 255 | 8930 |
| 2027 | 13429 | 1654 | 1147 | 622 | 10006 |
| 2028 | 15085 | 1870 | 1223 | 671 | 11320 |
| 2029 | 17235 | 2152 | 1336 | 770 | 12979 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 167.41 | 6.8% |
| 10-Year DCF (Growth) | 208.44 | 33.0% |
| 5-Year DCF (EBITDA) | 202.88 | 29.4% |
| 10-Year DCF (EBITDA) | 240.60 | 53.5% |
Is Applied Materials Inc (AMAT) a buy or a sell? Applied Materials Inc is definitely a buy. Based on our DCF analysis, Applied Materials Inc (AMAT) appears to be significantly undervalued with upside potential of 33.0%. 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 a strong buy at the current market price of $156.75.