Applied Materials (AMAT): A Fresh Valuation Look Following Broadened U.S. Export Controls on Chip Equipment

The U.S. Department of Commerce has expanded export controls on advanced chipmaking equipment. This action will directly impact Applied Materials (AMAT) and its ability to serve many China-based customers. The company now anticipates a significant reduction in future revenue as a result.

See our latest analysis for Applied Materials.

Prior to the latest trade restrictions, Applied Materials was riding a wave of momentum with highlights such as a record third-quarter revenue increase and new collaborations in AI-driven photonics. The news of expanded export controls arrived just as the stock had built up meaningful strength; shares dipped following the announcement, with investors recalibrating risk around China-driven sales. Still, its 1-year total shareholder return remains positive, reflecting a resilient long-term backdrop even as near-term pressures weigh on sentiment.

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With shares sliding after the latest export restrictions, the key debate for investors now is whether Applied Materials’ recent decline creates an attractive entry point or if the market has already factored in the impact on future growth.

Most Popular Narrative: 9% Overvalued

Applied Materials’ widely followed narrative places its fair value at $198.97, below the most recent closing price of $217.53. The analysis frames this gap as the market pricing in more optimistic assumptions than the consensus baseline.

"Leadership in materials engineering and advanced packaging positions the company to benefit from AI-driven semiconductor demand and global manufacturing expansion. Growing recurring revenues and deep customer collaboration provide margin resilience and support long-term financial growth amid industry transitions."

Read the complete narrative.

Want to know what fuels this ambitious price target? The secret sauce is a set of bullish assumptions about margin expansion and global market share gains, along with some surprising forecasts about where demand for next-gen chips is headed. See the full narrative to find out which numbers drive this bold call.

Result: Fair Value of $198.97 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing geopolitical tensions and high customer concentration could disrupt revenue stability. These factors could put Applied Materials’ long-term growth narrative at risk.

Find out about the key risks to this Applied Materials narrative.

Another View: Industry Multiples Tell a Different Story

Looking at Applied Materials from a price-to-earnings standpoint, its ratio of 25.4x is well below the semiconductor industry average of 37x and the peer average of 36.6x. The fair ratio, estimated at 32.3x, suggests there could be some upside if the market re-rates the stock. But does trading at a discount really mean less risk, or does it imply the market is wary about future growth?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Applied Materials Narrative

If you see things differently or want to dive deeper into the numbers yourself, you can craft your own analysis and build a personal view in under three minutes, Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Applied Materials.

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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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