Applied Materials (AMAT) Could Be 3% Undervalued After Intel Capex Boost

Applied Materials (AMAT) is back in focus after Intel increased its 2026 capital expenditure forecast to US$20b, lifting chip equipment stocks and reinforcing optimism around AI driven demand for semiconductor tools.

See our latest analysis for Applied Materials.

Applied Materials’ share price has gained 6.3% over the past week and 35% over 90 days, while its 1 year total shareholder return above 200% points to strong, building momentum supported by AI related equipment demand and upcoming earnings.

If you are watching how AI chip demand is affecting suppliers like Applied Materials, it could be a good time to review other potential beneficiaries through the Simply Wall St screener for 54 AI infrastructure stocks

After a 35% move in 90 days and a 1 year total return above 200%, Applied Materials now sits closer to analysts’ price targets. The key issue is whether the current risk reward still leans toward buyers.

Most Popular Narrative: 3% Undervalued

Applied Materials last closed at $562.8 compared with a most followed fair value narrative of $578.91, so the stock screens as slightly below that modeled estimate while analysts debate how durable AI driven wafer fab equipment demand will be.

The ongoing explosion in data creation and rapid adoption of digital transformation (IoT, automotive, industrial automation) continue to accelerate wafer fab buildouts globally, with over 100 new fabs or expansions tracked this year, and Governments incentivizing regional manufacturing. Applied's broad portfolio and investments in local manufacturing infrastructure (for example, new Arizona and EPIC centers) position it to capture a greater share of this growing and more geographically diverse capital expenditure, supporting both revenue growth and margin resilience.

Read the complete narrative.

Curious what underpins that fair value gap for Applied Materials? The narrative leans on strong earnings expansion, richer margins, and a premium future earnings multiple. The mix of growth, profitability and discount rate assumptions is what really moves the model.

Result: Fair Value of $578.91 (UNDERVALUED)

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

However, investors in Applied Materials still face meaningful risks if export restrictions tighten in China or if a few key customers pull back on capital spending.

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

Another View: SWS DCF Model Paints a Harsher Picture

That fair value narrative for Applied Materials points to a 3% undervaluation, but the SWS DCF model tells a different story. On that framework, the stock screens as overvalued, with our estimate of future cash flow value at $248.12 versus the current $562.8 share price.

DCF models put all the emphasis on long term cash generation. This gap flags the risk that cash flows may not keep up with the market price if current AI enthusiasm cools or growth assumptions prove too optimistic. Which set of assumptions do you think lines up better with your own view of Applied Materials?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Applied Materials for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 38 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With sentiment on Applied Materials clearly mixed, now is a useful moment to act quickly, review the data firsthand, and weigh both sides of the story for yourself with 4 key rewards and 2 important warning signs

Looking for more investment ideas beyond 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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