AI Demand Offsets Soft Near-Term Outlook: Is AMAT's Growth Narrative Shifting?

• Applied Materials announced its fourth-quarter 2025 results on November 13, 2025, after previously signaling expectations of a revenue decline due to reduced capacity in China and shifting demand from leading-edge customers.
• This mixed outlook highlights the company's dual position: benefiting from strong AI-driven semiconductor demand while facing concerns about near-term revenue growth and valuation.
• We’ll examine how the company’s expectation of near-term revenue decline amid AI strength may reshape its investment narrative.

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Applied Materials Investment Narrative Recap

To be a shareholder in Applied Materials today, you need to believe in the company’s ability to leverage its leadership in semiconductor equipment for AI and advanced chip manufacturing, even as near-term revenue is expected to decline. The recent signal of softer near-term outlook driven by weaker China demand has not materially shifted the dominant catalyst, AI-related investments, but it does raise the profile of short-term risks tied to regional market exposure and order volatility.

The most relevant recent announcement is the October 9 grand opening of the Materials-to-Fab Center at Arizona State University. This new $270 million R&D facility underscores Applied’s commitment to accelerating semiconductor innovation, supporting the longer-term AI and advanced node catalyst that could offset near-term digestion cycles and support future earnings growth.

However, investors should be aware that, in contrast, persistent revenue pressure from China’s reduced capacity and export license uncertainties could...

Read the full narrative on Applied Materials (it's free!)

Applied Materials' narrative projects $32.5 billion revenue and $9.2 billion earnings by 2028. This requires 4.3% yearly revenue growth and a $2.4 billion earnings increase from $6.8 billion currently.

Uncover how Applied Materials' forecasts yield a $218.35 fair value, a 5% downside to its current price.

Exploring Other Perspectives

Fair value estimates from 19 Simply Wall St Community members range from US$146 to US$247 per share, showing wide variation in outlooks. While some see considerable upside, others highlight ongoing risks related to China that could weigh on future performance, so consider multiple viewpoints before forming your own assessment.

Explore 19 other fair value estimates on Applied Materials - why the stock might be worth as much as 7% more than the current price!

Build Your Own Applied Materials Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Applied Materials research is our analysis highlighting 3 key rewards that could impact your investment decision.
• Our free Applied Materials research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Applied Materials' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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