Applied Materials AMAT

EARNINGS IN NINE DAYS. Applied Materials reports fiscal Q3 2026 on 2026-08-13, against a consensus of $3.39 non-GAAP earnings per share on $8.996B of revenue — which requires 23.2% year-on-year revenue growth from a series that was running at minus 2.1% two quarters ago. Anyone buying at today's close owns that print. This is an explicit input to the verdict and to position sizing below.

Reference table

1. What the business is, and how the segments actually report

Applied Materials, founded 1967 and listed since 1980-03-17, employs 36,500 people under chief executive Gary E. Dickerson. It provides, in the 10-K's own words, "equipment, services and software to the semiconductor and related industries."

As of fiscal 2025 the company reports TWO segments, not three. This matters, because the vendor payload and most secondary descriptions still carry the old three-segment structure. The 10-K filed 2025-12-12 states it directly:

> "We operate in two reportable segments: Semiconductor Systems and Applied Global Services (AGS). As of October 26, 2025, management no longer considers Display a significant operating segment for separate reporting purposes... Prior-year Corporate and Other balances have been recast to include Display financial results."

Semiconductor Systems is the capital-equipment business, comprising, per Note 15, "etch, rapid thermal processing, deposition, chemical mechanical planarization, metrology and inspection, wafer packaging, and ion implantation." It sells into three markets the company names explicitly: foundry, logic and other (split between leading edge, defined as 7 nanometres and below, and non-leading edge serving internet-of-things, communications, automotive, power and sensors); DRAM; and NAND flash.

Applied Global Services provides "services, spares and factory automation software" to the installed base, plus — through fiscal 2025 only — 200-millimetre and other equipment for non-leading-edge markets. The strategic intent is stated plainly: "to continue to shift the AGS service and spares business to a subscription agreement model... providing us a more predictable revenue stream."

Segment revenue, fiscal 2025 (from seg_prod, and it reconciles exactly):

The fiscal-2025 rows sum to $28.368B, exactly the reported revenue — the vendor's fiscal-2025 segment split is correct and matches the 10-K structure. The fiscal-2024 and fiscal-2023 rows do not: they sum to $27.021B and $26.298B against reported revenue of $27.176B and $26.517B, shortfalls of $155M and $219M, because those rows carry the pre-recast three-segment presentation and omit the Corporate and Other residual. The vendor is mixing two presentations across adjacent years. We use the 10-K structure and do not compare the fiscal-2024 and fiscal-2025 segment rows as like for like (Section 8, item 2).

A second restatement is already in flight and will land in the fiscal-2026 accounts. Per the April 2026 10-Q: "Effective the first quarter of fiscal 2026, we have moved our 200 millimeter (200mm) equipment business from our AGS segment to our Semiconductor Systems segment... In addition, effective in the first quarter of fiscal 2026, we are fully allocating corporate support costs to our reportable segments. Prior-period segment balances have been recast." Two presentation changes in two years. The practical effect will be to make Applied Global Services look like a purer service annuity — the 10-K says AGS operating margin fell in fiscal 2025 "primarily due to a decrease in 200mm equipment net revenue", so removing 200mm removes a drag — while loading it with allocated corporate cost. Any historical AGS margin comparison a reader encounters over the next year is likely to be comparing incompatible bases.

Segment operating income is a stated gap. The 10-K's MD&A section headed "Segment Operating Income (Loss)" and Note 15's "Information for each reportable segment" both exist in the filing, but their numeric tables did not survive text extraction. We therefore report only the filing's directional commentary — Semiconductor Systems operating margin increased in fiscal 2025 on higher revenue, favourable customer and product mix, lower material and manufacturing costs and higher average selling prices; Applied Global Services operating margin decreased on lower 200mm revenue, higher headcount and higher excess-and-obsolete inventory charges — and we decline to print segment margins we cannot source. Backlog is the same story: the 10-K states that "approximately 31% is not reasonably expected to be filled within the next 12 months" but the dollar table is not recoverable.

Geography, fiscal 2025 (sums to $28.368B exactly):

China fell from 37.2% of revenue to 30.1% in one year, a $1.588B absolute decline, while Taiwan rose from 14.8% to 24.2%. That single rotation is the most consequential fact in the geographic note and it is directly relevant to the knowledge-base claim examined in Section 7. The April 2026 10-Q adds that 88% of revenue in the quarter came from customers outside the United States.

Customer concentration is high and rising. Fiscal 2025: two customers at 19% and 15%. First half of fiscal 2026: two customers at 21% and 15% — a combined 36%, from 34%. The 10-K's risk language is blunt: "the actions of even a single customer have exposed and can further expose our business and operating results to greater volatility."

2. The single most important thing to understand about these numbers

You are not buying a company at 32x forward earnings. You are buying the midpoint of a distribution, and the distribution is enormous.

Here is the full consensus estimate block, with the published ranges:

Read the fiscal-2028 line carefully. Eleven analysts, and their earnings estimates run from $14.55 to $27.02 — a factor of 1.86. At the low end the stock trades on 37.6x fiscal 2028; at the high end, 20.2x. Fiscal 2027 is tighter but still spans 42.0x to 27.8x. Only fiscal 2026, four months from being reported, is tight at plus or minus 4%.

And the curve flattens where the multiple lives. Consensus earnings per share go $12.28, $16.93, $21.75, $22.68 — that is plus 38%, plus 29%, and then plus 4.3%. Consensus revenue growth decays from plus 28.9% (FY2027) to plus 20.0% (FY2028) to plus 4.7% (FY2029). The market's own forecasters believe this cycle rolls over inside the forecast horizon. A business growing 4% does not command 24x. That single observation is what caps the fair value in Section 6 and it is not our forecast — it is consensus arithmetic.

A second, smaller basis point that must be stated before any multiple is printed: the GAAP versus non-GAAP relationship on this name is unstable and it reversed sign between fiscal 2025 and fiscal 2026.

In the April 2026 quarter, GAAP net income of $2.806B exceeded operating income of $2.523B — and GAAP earnings per share of $3.51 exceeded the reported non-GAAP figure of $2.86 by $0.65 even though the quarter absorbed a $253M export-control settlement charge. The excess is non-operating: the fiscal-2025 10-K names "higher net gain on equity investments" as the driver of the same line item. Trailing GAAP diluted earnings per share are $10.64 (51.4x); trailing non-GAAP are $9.89 (55.3x). For fiscal 2025 the relationship ran the other way: GAAP $8.66 against a consensus non-GAAP $9.37.

Therefore: all forward multiples in this dive are struck on the non-GAAP consensus basis, because that is the basis the estimates are published on. The trailing GAAP price-to-earnings ratio of 51.4x is reported for completeness and is not comparable year to year.

Finally, mind the calendar. Applied's fiscal year ends in late October, so "fiscal 2025" is roughly November 2024 to October 2025 and the fiscal-2026 estimate of $12.28 is already half-complete. The earnings-calendar block in the payload is keyed to report dates, not period-end dates, which creates an easy trap: the 2025-12-12 entry showing $2.17 on $6.800B is the October 2025 quarter, not a year-ago comparison for the print due on 2026-08-13. The correct year-ago comparison for fiscal Q3 2026 is fiscal Q3 2025: revenue $7.302B and non-GAAP earnings per share $2.48. Against that, the $8.996B consensus is plus 23.2% year on year.

3. Growth and margin trajectory

Two things stand out.

First, the last three fiscal years were nearly flat: plus 2.8%, plus 2.5%, plus 4.4%. Applied is not a company that has been compounding revenue at 20%; it is a company that went sideways for three years and is now, on consensus, about to grow 17.8% and then 28.9%. The quarterly year-on-year series shows exactly when the turn happened: plus 7.7% (FQ3'25), minus 3.5% (FQ4'25), minus 2.1% (FQ1'26), plus 11.4% (FQ2'26). One quarter of genuine acceleration. Consensus for the print on 2026-08-13 is plus 23.2%.

Second, margin has improved almost monotonically, and the filing says why. Gross margin went 44.7% to 48.7% over five fiscal years and reached 49.9% in the April 2026 quarter — the highest in the series. The fiscal-2025 10-K: "Gross margin increased primarily driven by higher net revenue, favorable changes in customer and product mix, an increase in average selling prices, and lower material and manufacturing costs." The April 2026 10-Q: "Gross margin... increased primarily driven by higher revenue and increases in average selling prices." Average selling prices are named in both. That is pricing power at a cycle inflection, and it is the single strongest piece of qualitative evidence in the filings.

Operating margin has been steadier, 28.9% to 29.5%, because research and development has grown faster than revenue — $2.234B to $3.570B, from 13.0% to 12.6% of revenue, with the 10-K attributing the increase to "additional headcount... and higher depreciation expenses." The fiscal-2025 fourth quarter is a distorted data point: operating margin of 25.2% absorbed $181M of restructuring (a workforce reduction plan affecting roughly 4% of global headcount) and a $41M goodwill impairment on non-strategic businesses within Corporate and Other, together 3.3% of quarterly revenue. Adding back gives roughly 28.5%.

Applied Global Services, the annuity: $4.155B (FY2020) to $6.385B (FY2025), a five-year compound rate of 9.0%. But fiscal 2025 grew only 2.6%, and the 10-K explains: "higher customer spending on long-term service agreements and spares, partially offset by lower customer spending on 200mm equipment." The service core is growing; the equipment tail inside AGS is shrinking. Removing 200mm in fiscal 2026 will clarify this. The payload contains no subscription-agreement count and no renewal-rate disclosure, and neither appears in the extracted filings — both are stated gaps.

4. Balance sheet and the enterprise-value rebuild

As at 2025-10-26 (fiscal 2025 year end, the most recent full balance sheet in the payload):

• Cash and equivalents $7.241B · short-term investments $1.332B · total cash and short-term investments $8.573B
• Long-term investments $4.327B · total investments $5.659B
• Short-term debt (commercial paper) $100M · long-term debt $6.455B · lease obligations $495M · vendor totalDebt $7.050B
• Inventory $5.915B · goodwill $3.707B · intangibles $226M · total assets $36.299B · total equity $20.415B
• Current ratio 2.51 · quick ratio 1.80 · debt to equity 0.270 · interest coverage 31.1x

The filing settles the debt question. The fiscal-2025 10-K states: "As of October 26, 2025, we had $6.5 billion in aggregate principal amount of senior unsecured notes outstanding" and "At October 26, 2025, we had $100 million of commercial paper notes outstanding and recorded as short-term debt." That is $6.555B of funded debt on a carrying basis, against a $6.5B principal. The rest of the vendor's totalDebt is a $495M line labelled capitalLeaseObligations, and the 10-K's Contractual Obligations disclosure lists only two categories of on-balance-sheet debt: senior notes, and "our operating lease obligation was $565 million... of which $104 million is payable within 12 months." No finance-lease obligation is disclosed at all, and the lease footnote says "A majority of our lease arrangements are operating leases. The balances of our operating leases right-of-use assets and liabilities were not material." The vendor's $495M total and $91M current portion map almost exactly onto the 10-K's $565M undiscounted operating lease obligation with $104M due inside a year. We conclude the vendor's "capital lease obligations" line is a capitalised OPERATING lease, not funded debt. It is not double-counted inside longTermDebt — the components sum cleanly — but it inflates totalDebt.

The enterprise-value rebuild:

The vendor omits the entire $1.332B of short-term investments from netDebt, which flips the sign of the balance sheet from net cash to net debt. This is the textbook version of the defect. In percentage terms, however, it is immaterial here: $2.17B on a $434B enterprise value is 0.5%, and no multiple in this dive changes meaningfully. We report the correction because the sign matters for the risk assessment — Applied is a net-cash company — and because it is the same defect that has produced 30%-plus errors on smaller balance sheets. Enterprise value to sales is 14.88x corrected against the vendor's 14.96x. Nobody's investment case turns on that.

One EV multiple does change materially, and it is rejected. The vendor's evToEBITDATTM of 38.96x is computed on an EBITDA of roughly $11.14B, derived from a 38.4% ebitdaMarginTTM. That margin is inconsistent with the same file's own operating margin of 29.5%: trailing operating income is $8.564B (which the vendor's ebtPerEbitTTM chain independently confirms as its EBIT), and trailing depreciation and amortisation is roughly $0.5B, giving an operating EBITDA near $9.06B and a margin near 31.2%. The 38.4% figure is built from pre-tax income and therefore sweeps in interest income and equity-investment gains. Corrected enterprise value to operating EBITDA is roughly 47.7x, not 38.96x (Section 8, item 4).

On the balance-sheet date. The payload contains no quarterly balance sheet, so the table above is the fiscal-2025 year end. The April 2026 10-Q supplies enough narrative to bound the current position: operating cash flow of $2.5B in the first half, investing use of $1.7B (capital expenditure $1.3B, net investment purchases $289M, an acquisition of $175M), financing use of $1.7B, the $100M of commercial paper repaid in full, and working capital of $13.6B — a figure the vendor's workingCapitalTTM of $13.573B matches to the million, confirming the trailing metrics are struck on the April 2026 quarter. Derived, and labelled as derived: cash plus investments of roughly $8.0B against roughly $6.455B of funded debt, so net cash of roughly $1.5B at 2026-04-26. The direction of travel is intact.

One internal inconsistency in the 10-Q worth noting, which is correct rather than an error. Item 3 states "At April 26, 2026, the aggregate principal amount of long-term senior unsecured notes issued by us was $5.3 billion" while the liquidity section states "We had senior unsecured notes in the aggregate principal amount of $6.5 billion outstanding as of April 26, 2026." The reconciliation is that roughly $1.2B of notes has moved into current maturities and is therefore no longer "long-term." Total funded debt is unchanged; $1.2B is due within twelve months and will need to be repaid or refinanced during fiscal 2027.

5. Cash flow and capital returns — and the buyback that stopped

Three observations, in order of importance.

First, the buyback has decelerated sharply. Fiscal 2025 saw $4.895B of repurchases; the first half of fiscal 2026 saw $737M. The 10-Q confirms the authorisation is not the constraint: "In March 2025, our Board of Directors approved a common stock repurchase program authorizing $10.0 billion in repurchases, which supplemented the previous $10.0 billion authorization approved in March 2023. As of April 26, 2026, approximately $13.2 billion remained available." Only $0.8B of authorisation was consumed across two quarters, against $14.0B available at the fiscal-2025 year end.

Stated honestly, this is partly cash-constrained rather than purely a valuation signal. First-half operating cash flow of $2.5B against capital expenditure of $1.3B leaves roughly $1.2B of free cash flow, of which $730M went to dividends. Applied also paid a $253M settlement and $175M for an acquisition in the same period, and Applied's cash generation is seasonally back-half weighted (fiscal 2025 delivered $2.5B in the first half and $5.5B in the second). But the pace change is still striking: a company that repurchased 1.5% of itself in fiscal 2025 bought back roughly 0.2% in six months while the share price tripled. We do not over-read it. We do record it, and we make it a pre-registered flip condition.

Second, capital expenditure has nearly tripled and is running far ahead of depreciation. $787M (FY2022) to $2.260B (FY2025), with $1.3B in the first half of fiscal 2026 alone. The vendor's capexToDepreciationTTM is 5.92x; even against the cash-flow statement's fiscal-2025 D&A of $435M, capital expenditure is 5.2x depreciation. This is a heavy build phase, and it has two consequences the trailing numbers do not show: it is why free cash flow fell from $7.594B (FY2023) to $5.698B (FY2025) despite operating income rising, and it guarantees that depreciation steps up materially over the next three years, which is a margin headwind sitting outside every current estimate. The 10-K already attributes part of the research-and-development expense increase to "higher depreciation expenses."

Third, the shareholder yield is thin at this price. The dividend is $1.91 a share trailing, a 0.35% yield, on a 12.9% payout ratio — well covered, but immaterial as a return component. Free cash flow of $5.965B on a $433.99B market capitalisation is a 1.37% free-cash-flow yield. Even the fiscal-2025 combination of $4.895B of buyback and $1.384B of dividends totals $6.279B, or 1.45% of today's market capitalisation. For comparison, that $6.279B was 2.5% to 4% of the market capitalisation for most of the period in which it was spent.

Share count: 923M (FY2020) to 808M (FY2025), a 12.5% reduction, then 799M in each of the last two quarters — flat. The rollforward is internally consistent: fiscal 2025's $4.895B of repurchase at an average price implied by the count reduction (834M to 808M, 26M shares) works out near $188 a share, which is plausible for a fiscal year running November 2024 to October 2025. No reconciliation problem here — the share-count series behaves.

Purchase obligations are a genuine forward signal. The 10-K discloses $10.6B of purchase obligations for goods and services, of which $7.3B is payable within twelve months — 37% of trailing revenue committed. That is a company buying components for a ramp. It is also, if the ramp does not arrive, an inventory problem on top of an already-elevated 156 days of inventory.

6. Valuation — priced in or room?

At $546.62 (market capitalisation $433.99B, ~794.0M shares, corrected enterprise value $431.98B):

Estimate coverage is good in breadth and poor in agreement. Twenty-six analysts on fiscal-2026 revenue, twenty on earnings; nineteen on fiscal-2027 earnings; eleven on fiscal 2028 and seven on fiscal 2029. The dispersion problem set out in Section 2 is the binding constraint.

Peer context. The vendor peer set is only half relevant. KLA ($255.3B) and Lam Research ($397.4B) are direct wafer-fab-equipment comparables; Micron ($1.008T) and Intel ($509.1B) are customers; Texas Instruments, Qualcomm, Arm and Sony are unrelated semiconductor businesses; Intuit and ServiceNow are software companies and have no business in this list. ASML ($659.8B), the fourth of the large equipment names, is not in the vendor's peer block at all. No peer earnings or multiples are supplied in the file, so no peer-multiple comparison is drawn.

The vendor's own scoring model rates Applied B+ with an overall score of 3, and the internal breakdown is a neat summary of the whole case: return on equity 5 of 5, return on assets 5 of 5, price to earnings 2 of 5, price to book 1 of 5. Best-in-class returns, worst-in-class valuation.

6a. What today's price assumes (the inversion)

At $546.62 — 44.5x fiscal 2026, 32.3x fiscal 2027, 25.1x fiscal 2028 — the price embeds roughly the following falsifiable claims:

• Revenue reaches $43.096B in fiscal 2027, up 51.9% from the $28.368B actually delivered in fiscal 2025. (Consensus-derived, 25 analysts, range $37.120B–$47.229B.) This requires the plus-11.4% year-on-year growth of the single April 2026 quarter to become plus 23% or better and stay there for eight quarters. The three fiscal years before this one grew 2.8%, 2.5% and 4.4%.
• Earnings per share reach $21.75 by fiscal 2028, up 151% from the $8.66 of fiscal 2025. (Consensus-derived, 11 analysts, range $14.55–$27.02.) This is the most fragile assumption in the price, because it is both the largest number and the thinnest sample, and because the multiple the reader is paying only looks reasonable when measured against it.
• The market still pays roughly 24-25x earnings in 2028-29, at which point consensus itself models growth of 4.3%. (Our arithmetic on consensus figures.) A no-growth cyclical at 24x is a strong assumption about the terminal multiple, and it is the leg that does the most work in the current price.
• Gross margin holds above 49% and average selling prices continue to rise. (Filing-derived: 49.9% in the April 2026 quarter, with the 10-Q crediting revenue and average selling prices.) Falsifiable at the next print.
• China stabilises near 30% of revenue and the export-control regime does not tighten further. (Filing-derived: $8.529B, 30.1% of fiscal 2025, down from 37.2%; the February 2026 Bureau of Industry and Security settlement cost $253M and carries a suspended denial order.) The price does not appear to embed any further China deterioration.
• The fiscal Q3 2026 print on 2026-08-13 delivers at least $8.996B of revenue. (Consensus-derived, and the near-term binary.) This is the only one of the six that resolves inside nine days.

6b. The return bridge (why the multiple moves)

Expected return over 12-24 months ≈ earnings growth + multiple drift + shareholder yield.

Earnings growth on consensus is very large: plus 38% (FY26), plus 29% (FY27), plus 20% (FY28). Shareholder yield is small: a 0.35% dividend plus a buyback currently running at roughly 0.35% annualised, so call it 0.7%. Everything therefore depends on multiple drift, and our base case assumes COMPRESSION.

The reason is mechanical and is set out in Section 2. The reader today pays 25.1x fiscal-2028 earnings. Over a twelve-month horizon the market's anchor rolls forward one fiscal year, from 2028 to 2029. If the multiple simply holds at 25.1x and the anchor rolls, the price becomes 25.1 × $22.68 = $569 — because consensus fiscal-2029 earnings are only 4.3% above fiscal 2028. That is our base case, and it is a no-re-rating construction: the entire 4.3% of implied upside is the one-year roll, and it is small precisely because the consensus curve flattens.

Contrast the same construction on the nearer anchor: if the market keeps paying today's 32.3x forward multiple and the forward year rolls from 2027 to 2028, the price becomes 32.3 × $21.75 = $702. That is the bull mechanism — and note what it requires: that the market is still paying 32x for a company whose consensus growth in the following year is 4.3%. We do not think that survives contact with 2028.

Stated plainly: our fair value assumes the multiple compresses from 32.3x forward to roughly 25x forward over the horizon, driven by growth maturation that consensus itself forecasts. If the multiple instead holds, the stock is worth $700. The fragile leg of the bull case is not the earnings — it is the terminal multiple.

6c. Variant perception (where we differ, what would surprise)

• We are 10% below the street's price target and the gap is entirely about the terminal multiple, not the earnings. The street's $633.54 consensus (median $646) implies roughly 29x fiscal-2028 earnings. We use 25x, which is the multiple the market is paying today. We are not cutting anyone's estimates. We are declining to assume the multiple expands. Watchable number: whether the fiscal-2027 consensus of $16.93 holds through the next two prints, and whether the fiscal-2028 estimate range narrows from $14.55–$27.02 as coverage broadens beyond eleven analysts.
• We think the most diversified wafer-fab-equipment name is the wrong expression of a memory-led cycle, and today's session proves it. Applied rose 5.48% on a day when Lam Research rose 7.85%, Micron 7.62% and KLA 6.95%. Applied's breadth — 30% China, a large trailing-edge and non-leading-edge book, a Display remnant, and a 22.5% service annuity whose revenue does not move with a quarter's memory orders — damps the beta in both directions. That is a virtue for a long-term holder and a drag in a memory upcycle. If the reader's thesis is specifically the DRAM and high-bandwidth-memory buildout, Applied is not the cleanest instrument.
• We think the buyback deceleration is under-discussed. $4.895B in fiscal 2025 became $737M in six months, with $13.2B of authorisation unused. Part is explained by a doubled capital-expenditure programme, a $253M settlement and an acquisition. But the company's own capital-allocation behaviour has become markedly less enthusiastic about its own shares at a tripled price, and it coincides with the chief executive selling $55.5M at $700 to $736. Watchable number: repurchase spend in the fiscal Q3 cash-flow statement.
• Where we do NOT differ: we accept the cycle. The 10-Q's attribution of higher memory spending to DRAM technology transitions, of higher foundry and logic spending to leading-edge demand, and of gross-margin expansion to average selling prices, is exactly what an early-cycle inflection looks like. $10.6B of purchase obligations, $7.3B due within twelve months, corroborates it. We are not forecasting a disappointment. We are declining to pay for the whole of it in advance.
• Positive surprise that would force a re-rate: a fiscal Q3 print materially above $8.996B combined with a fiscal Q4 outlook implying $9.5B or more (guidance is management's own voice and carries half weight in this framework, but the revenue actual does not); a fiscal-2027 consensus that moves above $18; or a resumption of buyback at $1.5B or more a quarter. Watchable event: 2026-08-13.
• Negative surprise that would break the thesis: revenue below $8.996B on 2026-08-13; any activation of the suspended denial order attached to the February 2026 settlement, which would restrict Applied's ability to export and is a low-probability, very-high-severity event disclosed in the filings; a further leg down in China from 30.1%; or the two-customer concentration, already 36%, producing a single-customer order deferral.

Synthos fair values

All three anchors are struck on consensus non-GAAP earnings per share, which is the basis the estimates are published on, and are cross-checked against a second fiscal year.

• Bear ~$365 — 22x fiscal-2027 consensus earnings of $16.93 ($372); cross-check 25x the LOW end of the fiscal-2028 range, $14.55 ($364). The scenario: the acceleration proves to be a single strong quarter rather than a cycle; fiscal-2027 revenue lands nearer the $37.120B low end than the $43.096B midpoint; the multiple reverts toward the mid-cycle level a cyclical capital-equipment maker has historically commanded. −33%. Note that this is above the level the stock traded at as recently as the start of this twelve-month window.
• Base ~$570 — 25.1x fiscal-2029 consensus earnings of $22.68 ($569), which is today's fiscal-2028 multiple held constant while the anchor rolls forward one year; cross-check 26.2x fiscal-2028 consensus of $21.75 ($570) and 33.7x fiscal 2027. The scenario: consensus is broadly right, the cycle delivers, and the market pays the same forward multiple it pays today. +4.3%, plus roughly 0.7% of shareholder yield. This is a no-re-rating construction, and the reason the answer is so close to spot is that consensus fiscal-2029 earnings are only 4.3% above fiscal 2028.
• Bull ~$765 — 35.2x fiscal-2028 consensus of $21.75 ($765); cross-check 33.7x the fiscal-2029 figure. The scenario: the market continues to pay today's 32-35x forward multiple through 2027-28, the cycle extends past the fiscal-2029 flattening consensus currently models, high-bandwidth memory and advanced packaging broaden the served market, and Applied Global Services re-rates the whole company as a subscription business. +40%.

Base is 4.3% above spot; asymmetry roughly 1.2 to 1 to the upside (33% down, 40% up). That is not enough asymmetry to buy nine days before a binary print at 32x forward earnings. It is a Watch.

7. Knowledge base — a very thin lane, stated plainly

Raw hits: 8 across two searches. Unique claims: 7. Used: 4. Discarded: 3 (plus one duplicate document). Searches covered AMAT, Applied Materials, WFE and semiconductor equipment, then Gary Dickerson, wafer fab equipment, Applied Global Services, semicap and semi-cap, across all 51,928 distilled claims.

Only TWO of the tracked claims name Applied Materials as an entity. Neither is a valuation call. There is no view on this stock, at any price, anywhere in the base. For a $434B company that is a remarkably thin lane, and it is a finding rather than a gap to be padded around: the panel we track has not underwritten this name, so the conviction rating is Low and the knowledge base contributes almost nothing to the verdict. We say that instead of inflating four generic sector observations into a thesis.

The one substantive entity claim, and it is bearish — Dylan Patel (independent, not management, first-class weight):

> 2024-10-02 · neutral stance · conviction 70 · entities: ASML, Applied Materials · categories: export controls, semiconductor equipment

> "Chip export controls work but equipment controls are a failure — China was recently ~48% of ASML and ~45% of Applied Materials revenue, and the tools shipped build chips better than the West legally sells China."

This is exactly what a usable claim looks like: specific, dated, attributed to a named independent analyst, and testable against the filings. We tested it, and it splits.

On the number, the claim overstates. The 10-K geographic note — which sums exactly to reported revenue and is therefore the authoritative source — puts China at $10.117B, or 37.2% of fiscal 2024, the fiscal year in progress when the claim was made. No fiscal year in the available ten-year geographic series reaches 45%; the peak is that 37.2%. Quarterly China share may well have run higher within fiscal 2024, but the payload contains no quarterly geographic split, so we do not assert it. And by fiscal 2025 China had fallen to $8.529B, or 30.1% — a $1.588B absolute decline and a 710-basis-point drop in share, with Taiwan rising from 14.8% to 24.2% over the same year. On the trajectory, the claim is going the wrong way.

On the mechanism, the claim is partly vindicated, and from a source the claim itself could not have anticipated. The April 2026 10-Q discloses:

> "On February 11, 2026, we entered into a settlement agreement with the U.S. Commerce Department Bureau of Industry and Security (BIS) to resolve its inquiry relating to certain China customer shipments and export controls compliance and agreed to pay BIS an amount of $253 million, which we paid in full during our second quarter of fiscal 2026. The settlement agreement... also includes a denial order that is suspended and will be waived three years after the date of the order issued under the settlement agreement, provided that we have timely completed the audit requirements."

A $253M penalty for China shipments is direct evidence that leakage occurred — Patel's central mechanism. It is equally direct evidence that the regime now has enforcement teeth, which cuts against the durability of the leakage. The suspended denial order is the more important disclosure: Applied is on a three-year probation, and a failed compliance audit could in principle activate an order restricting its ability to export. That is a low-probability, very-high-severity risk that appears nowhere in any multiple.

The second entity claim is a structural principle rather than a stock view:

> 2026-03-03 · bullish · conviction 70 · horizon: principle · entities: Applied Materials, Lam Research, KLA · source: compound_and_friends

> "Semi-cap went from ~20 firms to three giants via acquisition; illustrates how every sector consolidates."

Useful as background for why the margin structure is durable — three scaled players with high switching costs — but it is offered as an illustration of a general law of industry consolidation, not as a reason to buy Applied at $546.62. We weight it accordingly.

Two text matches used as sector colour only (the company is not the entity in either):

> 2026-02-27 · bullish · conviction 70 · entity: Lam Research · source: compound_and_friends

> "Semiconductor equipment is the best spot in semis—the one area without parabolic blowoffs, unlike hyperscalers (2024) or memory (2025)."

> 2026-05-28 · neutral · conviction 70 · speaker: Dan Loeb · source: invest_like_the_best

> "Even when semiconductor, semi-cap and memory fundamentals are genuinely super-strong, stocks fall when expectations run too high — as seen when Micron reported up 80% and the stock still went down."

The Loeb claim is the most directly useful thing in the entire lane for today's question, and it is worth quoting because it is precisely the risk in front of the reader: a company can report genuinely excellent numbers on 2026-08-13 and the shares can still fall, because a 203.7% twelve-month return has already embedded excellence. It is attributed to Dan Loeb as the speaker, with invest_like_the_best as the channel — a distinction we maintain because the two are not the same thing. Note also that the February 2026 claim about semi-cap being "the one area without parabolic blowoffs" has been overtaken by events: Applied is up 203.7% in twelve months, which is a parabolic move by any reasonable definition.

Discarded, with reasons:

1. geopolitical_cousins, 2025-11-26 — "China won't fully sever trade with Japan because it still depends on Japanese semiconductor equipment." Entities are Japan and China. A category collision on the phrase "semiconductor equipment": the claim concerns Japan-China trade, not Applied Materials, and Applied is not a Japanese supplier. Discarded.

2. compound_and_friends, 2026-03-03 (second claim, same document) — "Markets coalesce around 2-3 platforms; Fortune 500 won't juggle five vendors, so cyber consolidates like semi-cap equipment." Semi-cap appears only as an analogy inside a claim about cybersecurity software. Discarded.

3. invest_like_the_best, 2026-05-20 — the SpaceX and Tesla TerraFab joint venture, entity INTC, referencing "semi-cap A-teams drawn by Elon." A claim about Intel and a fab joint venture; Applied is not named. Discarded, though it is worth one line as background: a large new American fab would be an equipment customer.

Net stance: neutral-thin. One bearish-leaning structural claim about China, partly falsified on the number and partly vindicated on the mechanism; one bullish structural claim about industry consolidation; one bullish sector claim already overtaken by the price action; and one neutral warning about expectations that reads as a direct caution on today's entry. The knowledge base does not support a Buy on this name and does not support an Avoid either. It supports waiting.

8. Data integrity — what we rejected from the vendor file and why

Nine items. Listed rather than silently corrected.

1. netDebt of −$191M omits the entire $1.332B of short-term investments, and enterpriseValueTTM is built on it. The vendor computes net debt as total debt ($7.050B) less cash and equivalents ($7.241B) only. Corrected on filing-verified funded debt of $6.555B against cash plus short-term investments of $8.573B: NET CASH of $2.018B, and enterprise value of $431.976B against the vendor's $434.148B. The sign of the balance sheet is wrong in the vendor file. The magnitude of the error — $2.17B on $434B, 0.5% — is immaterial to any multiple, and we say so rather than dressing a small correction as a large one.

2. seg_prod mixes two segment presentations across adjacent fiscal years. The fiscal-2025 row (Semiconductor Systems $20.798B, Applied Global Services $6.385B, Corporate and Reconciling Items $1.185B) sums to $28.368B, exactly the reported revenue, and matches the 10-K's two-reportable-segment structure. The fiscal-2024 row sums to $27.021B against reported revenue of $27.176B, a $155M shortfall, and fiscal 2023 to $26.298B against $26.517B, a $219M shortfall, because both carry the pre-recast three-segment presentation with Display broken out and no Corporate and Other residual. The vendor reports a Display segment for FY2024 and none for FY2025; the 10-K shows Display recast into Corporate and Other with prior years restated; we use the 10-K structure and refuse to compare the fiscal-2024 and fiscal-2025 segment rows as like for like.

3. capitalLeaseObligations of $495M appears to be a capitalised OPERATING lease, not funded debt. It is not double-counted inside longTermDebt — totalDebt of $7.050B equals $100M short-term plus $6.455B long-term plus $495M leases, and the balance-sheet components sum correctly. But the 10-K's Contractual Obligations disclosure lists only senior notes ($6.5B principal) and an operating lease obligation of $565M with $104M due within twelve months, and discloses no finance-lease obligation at all; the lease footnote states that operating-lease right-of-use assets and liabilities were "not material." The vendor's $495M total and $91M current portion map onto the operating-lease disclosure almost exactly. We use funded debt of $6.555B for the enterprise-value rebuild and report the all-in figure alongside it.

4. ebitdaMarginTTM of 38.4% and evToEBITDATTM of 38.96x are overstated and REJECTED. The 38.4% margin implies trailing EBITDA of roughly $11.14B, but trailing operating income is $8.564B (a 29.5% margin, which the sum of the four quarterly operating-income figures confirms, and which the file's own ebtPerEbitTTM chain independently reproduces as EBIT). The vendor's EBITDA is evidently built from pre-tax income, sweeping in interest income and equity-investment gains. Corrected operating EBITDA is roughly $9.06B, a 31.2% margin, and corrected enterprise value to operating EBITDA is roughly 47.7x, not 38.96x. We also reject ebitMarginTTM (36.7%) for the same reason, and netDebtToEBITDATTM (0.014x) because the company is in net cash.

5. The est EBITDA and EBIT rows are corrupt in six of eight years — REJECTED, and forward valuation runs on epsAvg. In the FY2024E through FY2029E rows the file reports EBIT ABOVE EBITDA, which is arithmetically impossible: FY2025E EBITDA $10.202B against EBIT $10.472B; FY2027E $15.555B against $15.967B; FY2028E $18.671B against $19.165B. Only the FY2022E and FY2023E rows are correctly ordered. Separately, the FY2025E EBITDA of $10.202B is 17% above the actual ($8.289B of operating income plus $435M of D&A equals $8.724B). No EBITDA-based forward multiple appears anywhere in this dive.

6. priceToFairValueTTM of 18.153 is identical to priceToBookRatioTTM of 18.153 — it is not a fair-value estimate and is REJECTED as mislabelled. The field is book value under a different name.

7. The tech block and the quote block disagree on the 52-week range. tech reports a high of $723.00 and a low of $156.25; quote reports $739.67 and $154.47. The difference is closing prices versus intraday extremes. We use the tech close-based figures for all drawdown arithmetic, for internal consistency with the moving averages and returns computed on the same series, and report both. On the closing basis the stock is 24.4% below its high; on the intraday basis, 26.1%.

8. tech.max_dd_from_peak of −24.3956% is IDENTICAL to pct_from_hi to five decimal places — it is not a true maximum drawdown and is REJECTED. It measures the current price against the peak rather than the worst close against the peak. The actual trailing drawdown was at least 28.3%: yesterday's close of $518.21 is 28.32% below the $723.00 peak. Today's 5.48% rally is why the two figures coincide.

9. earn_cal is keyed to REPORT dates, not period-end dates, which is a trap on a late-October fiscal year. The 2025-12-12 entry showing $2.17 on $6.800B is the quarter ended 2025-10-26, not a year-ago comparable for the 2026-08-13 print. The correct year-ago comparison for fiscal Q3 2026 is the quarter ended 2025-07-27: revenue $7.302B, non-GAAP earnings per share $2.48, GAAP $2.21. We restate every comparison on the period-end basis.

Not defects, correctly reported. The share-count rollforward reconciles (923M in FY2020 to 808M in FY2025 to 799M in the last two quarters, consistent with the disclosed repurchases); totalDebt components sum cleanly with no double count; the fiscal-2025 segment and geographic tables each sum exactly to reported revenue; the price-target block shows genuine dispersion ($425 low, $900 high, $646 median) rather than the single-value collapse seen on some names; workingCapitalTTM of $13.573B matches the 10-Q's "$13.6 billion as of April 26, 2026" to the million, confirming the trailing metrics are struck on the April 2026 quarter; and capexToDepreciationTTM of 5.92x is high but real — capital expenditure genuinely is running several times depreciation.

Two gaps that neither source fills. Segment operating income is referenced in the 10-K MD&A and Note 15 but its numeric tables did not survive text extraction, so no segment margin is printed. Backlog in dollars is likewise unrecoverable; only the qualitative disclosure that 31% is not expected to be filled within twelve months is available. Subscription-agreement counts and renewal rates for Applied Global Services do not appear in either the payload or the extracted filings. All three are stated rather than estimated around.

9. Technicals

• Price $546.62, up 5.48% on the day. Fifty-day average $547.80 — the stock is 0.2% BELOW it even after today's move. Two-hundred-day average $376.56 — 45.2% above it.
• Twelve-month return +203.7% against SPY +24.3% and QQQ +30.8%. Six-month +66.4% against SPY +11.1%. Three-month +39.7% against SPY +7.6%. This is the strongest relative performance in the batch by a wide margin.
• But 24.4% below the closing 52-week high of $723.00 (26.1% below the intraday $739.67), and 249.8% above the low of $156.25. The peak was set, and the decline from it has been running for roughly two months.
• RSI 45.3 — neutral, no oversold signal. MACD −15.16 — negative, momentum still pointed down on the medium-term oscillator despite today.
• Volume 7.38M shares. Beta 1.618.

Non-equity tripwire: checked and passed. Common stock on NASDAQ, listed since 1980-03-17, price $546.62 (nowhere near a $25 or $1,000 par), beta 1.618 (far too high for a preferred or a baby bond), dividend $1.91 and growing rather than fixed, 7.38M shares traded, and a 52-week band from $154.47 to $739.67 — a 4.8x range no fixed-income instrument produces. This is the operating company's common equity.

Today's move and what it does to the entry

Applied rose 5.48%, the SMALLEST gain of the four wafer-fab-equipment names on a day the whole complex was bid: Lam Research +7.85%, Micron +7.62%, KLA +6.95%, ASML +4.22%, and across the wider batch Marvell +12.81%, Intel +10.92%, AMD +7.00%. The move is real, not a data artefact.

Why the broadest franchise lagged the most memory-levered ones is the interesting part, and it is structural rather than incidental. Today's leadership was memory: Micron up 7.62% carried the names whose order books are most directly geared to DRAM and NAND capacity. Lam Research is the most memory-levered of the large equipment makers — etch and deposition are the process steps that scale with 3D NAND layer counts and DRAM capacitor structures — and it led. KLA sells process control, which is levered to leading-edge yield ramps, and it was close behind. Applied is the most diversified of the four, and diversification is exactly what damps a single-vertical rally: roughly 30% of revenue in China, a large trailing-edge and non-leading-edge book that does not move with memory capital expenditure, a Display remnant now too small to report separately, and a 22.5% services annuity whose revenue is driven by installed-base chamber counts and wafer starts rather than by this quarter's memory orders. ASML, at +4.22%, lagged for the mirror-image reason: extreme-ultraviolet lithography is a leading-edge logic story with long lead times, so it is the least sensitive to a memory-order impulse.

The practical read for the four names as one trade with four expressions: Applied is the low-beta expression. It participates less on days like today and it should give back less when the memory impulse fades. For an investor whose thesis is specifically high-bandwidth memory, Applied is not the cleanest instrument. For an investor who wants exposure to total wafer-fab equipment spending regardless of which node or which memory type leads, it is the best one.

Does today's gap make this a bad entry? Less than for the other three, and still not a good one. The distinguishing fact is that after rising 5.48% Applied is still marginally below its 50-day average and 24.4% below its high. This was not a breakout to new highs; it was a bounce inside a two-month decline. On that narrow test Applied is the least-extended of the four.

But three things still argue against buying today. First, base fair value of $570 is only 4.3% above spot — the price is already close to what the arithmetic supports, gap or no gap. Second, earnings land in nine days against a consensus requiring the sharpest year-on-year acceleration in the recent series; buying at a 5.48% gap immediately before a binary event is paying up for the right to take event risk. Third, the MACD is negative and the 50-day has not been reclaimed, so there is not even a momentum argument to offset the valuation one.

The honest answer is to wait for the print. If it delivers, the stock can be bought at a higher price with the largest single uncertainty removed, and $570 becomes a conservative anchor rather than a ceiling. If it disappoints, the bear case at $365 defines a far better entry. Either resolution is more attractive than paying $546.62 nine days early.

10. Insiders — uniformly negative, and executed well above spot

Every transaction in the file is a disposal. There is not one purchase.

The reading, stated carefully. The chief executive sold 78,321 shares across two days for approximately $55.5M, at prices of $700.21 to $736.05 — between 28% and 35% above today's close of $546.62, and at or very near the 52-week high. He retains 1,599,843 shares, worth roughly $875M at spot, so the disposal was 4.7% of his holding and he remains overwhelmingly exposed to the equity. The Adam Sanders entry is an F-InKind share withholding for tax on vesting and is not a discretionary sale; it should not be counted against him.

Three qualifications, because insider sales are the most over-read signal in equity research. Sales of this size are frequently executed under pre-arranged trading plans adopted months in advance; the file does not indicate whether a plan was in place, so we cannot say. A chief executive with $875M of remaining exposure diversifying 4.7% of it after a tripling is ordinary financial prudence, not a verdict. And a director selling 9,250 shares at $599.77 is not a large transaction.

What the pattern does establish is the absence of the opposite. Across a window in which the shares traded from roughly $600 to $736 and then fell to $518, not one officer or director bought a single share. Combined with a buyback that fell from $4.895B a year to $737M in six months, nobody with inside information has been an incremental buyer of this equity at these prices. That is a supporting input to the Watch, not the reason for it.

11. Verdict, kill-criteria and flip conditions

Watch.

What you are being offered. One of the highest-quality industrial franchises in existence: 49% gross margin and rising, with the filings crediting average selling prices; a 39.8% return on equity and a 21.6% return on invested capital; $2.018B of net cash; interest coverage of 31.1x; five consecutive earnings beats; a $6.385B installed-base services annuity being migrated to subscription; 36,500 employees and a portfolio spanning every materials-engineering step in chip fabrication; 41 buy ratings against 12 holds and zero sells; and a genuine, filing-corroborated cycle inflection with $10.6B of purchase obligations behind it.

What you are being asked to pay. 44.5x fiscal-2026 consensus, 32.3x fiscal 2027, 25.1x fiscal 2028, 18.2x book, and a 1.37% free-cash-flow yield, after a 203.7% twelve-month return. And the consensus curve that justifies those multiples flattens at the horizon: earnings growth of plus 38%, plus 29%, plus 20%, then plus 4.3% in fiscal 2029. Hold today's fiscal-2028 multiple constant and roll the anchor forward one year and the answer is $570 — 4.3% above spot. Behind that midpoint sits a fiscal-2028 estimate range of $14.55 to $27.02 on eleven analysts.

And there is a date. Fiscal Q3 2026 earnings on 2026-08-13, nine days from this dive, against a consensus of $3.39 on $8.996B — plus 23.2% year on year and plus 13.7% sequentially, the sharpest acceleration in the series, from a base that was contracting two quarters ago. A reader buying at today's close owns that print, and has been given 4.3% of expected upside as compensation for taking it. That trade-off is the verdict.

Watch, not Avoid, because the business quality and the balance sheet make Avoid indefensible and because the cycle is real. Watch, not Buy, because the base case is 4.3% above spot, the knowledge base has no view on this name, every insider transaction is a sale, the company's own buyback has slowed by a factor of seven, and the single largest uncertainty resolves in nine days.

Pre-registered FLIP TO BUY — TACTICAL (any two of the following):

• The 2026-08-13 print delivers revenue of $8.996B or better AND a fiscal Q4 outlook implying $9.5B or more. Guidance is management's own voice and carries half weight in this framework; the revenue actual does not.
• The share price trades back into the $440-480 zone — roughly 26-28x fiscal-2027 consensus — without any downward revision to the fiscal-2027 estimate of $16.93. That combination restores the asymmetry.
• Buyback resumes at $1.5B or more in a quarter, from the $737M spent across the whole first half of fiscal 2026, with $13.2B of authorisation available. This would be management's capital allocation contradicting management's share sales.
• Any open-market insider purchase by an officer or director.
• The fiscal-2028 estimate range narrows materially — say to $18-25 — as coverage broadens beyond eleven analysts, removing the distribution problem that caps the fair value.

Pre-registered KILL criteria — what would move this to Avoid:

• Revenue below $8.996B on 2026-08-13, or a fiscal Q4 outlook implying less than roughly $9.0B, which would break the fiscal-2026 consensus of $12.28 and force a re-basing of the entire forward curve.
• Fiscal-2027 consensus earnings per share drifting below $15 — a 12% cut — which would put the stock on 36x a falling number.
• Any activation of the suspended denial order attached to the February 2026 Bureau of Industry and Security settlement, or a failed compliance audit. Low probability, very high severity.
• China falling below 25% of revenue without offsetting growth in Taiwan, Korea or the United States, indicating the export-control regime is tightening faster than the rest of the business can compensate.
• The two-customer concentration rising above 40% of revenue from the current 36%.
• Gross margin rolling back below 48% for two consecutive quarters, which would falsify the average-selling-price argument the filings make.
• Free cash flow failing to exceed $7B in fiscal 2027 while capital expenditure stays above $2.5B — that is the combination that would show the build phase is consuming rather than creating value.

Where AMAT fits in the Synthos Framework Portfolio. The semiconductor capital equipment sleeve, as a watch-list name with a 0% current weight and a 1.5-2% target size on a successful flip condition. If the reader must hold wafer-fab-equipment exposure today, the batch context argues for treating Lam Research, KLA, Applied and ASML as one trade with four expressions and sizing the sleeve rather than the name: Applied is the diversified, lowest-beta expression, which is why it rose least today and why it should fall least when the memory impulse fades. It is the right core holding of the four and the wrong tactical one. On any entry, stage it over three or more tranches and place none of them before 2026-08-13.

Single biggest risk: estimate dispersion at exactly the horizon the multiple depends on. The stock's valuation only looks defensible measured against fiscal-2028 earnings, and the fiscal-2028 consensus is eleven analysts spanning $14.55 to $27.02 — the difference between 37.6x and 20.2x. The "consensus" number everyone quotes is the average of two incompatible views of how long this cycle runs, and paying 25x for that average means paying for the optimistic half in advance. This is why the risk score is 7 rather than 5, despite a net-cash balance sheet and a 39.8% return on equity.

Most fragile assumption in the price: that the market will still pay roughly 24-25x earnings in fiscal 2028-29, at a point where consensus itself models earnings growth decaying to 4.3% and revenue growth to 4.7%. Every other input can go right — the cycle can deliver $43.1B in fiscal 2027 and $21.75 of earnings in fiscal 2028 — and the reader can still lose money if the terminal multiple compresses toward the mid-cycle level a cyclical capital-equipment maker has historically commanded. The earnings are not the fragile leg. The multiple is.

Provenance & disclosures

• Traceability: 8 raw knowledge-base hits across two searches, 7 unique claims, 4 used and 3 discarded (breadth 3, net conviction neutral-thin). Searches covered AMAT, Applied Materials, WFE, semiconductor equipment, then Gary Dickerson, wafer fab equipment, Applied Global Services, semicap and semi-cap, across 51,928 records. Only 2 claims name Applied Materials as an entity — Dylan Patel (2024-10-02, neutral, conviction 70, on export-control leakage and a China revenue share put near 45%) and compound_and_friends (2026-03-03, bullish, conviction 70, on semi-cap consolidation as a general principle). Two further claims are text matches used as sector colour only: compound_and_friends (2026-02-27, bullish 70, entity Lam Research) and Dan Loeb via invest_like_the_best (2026-05-28, neutral 70). Discarded: geopolitical_cousins 2025-11-26 (Japan-China trade, a category collision on "semiconductor equipment"); compound_and_friends 2026-03-03 second claim (semi-cap used as an analogy inside a cybersecurity thesis); invest_like_the_best 2026-05-20 (entity INTC, about a fab joint venture). There is no valuation call on Applied Materials at any price anywhere in the tracked base, and that thinness is reported as a finding rather than padded around. Where speaker and channel differ they are named separately. All quotes are verbatim from the stored claim text.
• Data as-of: income statement through fiscal Q2 2026 ended 2026-04-26 (10-Q filed 2026-05-21) · balance sheet and cash flow 2025-10-26 (fiscal 2025, 10-K filed 2025-12-12; no quarterly balance sheet in the payload, with the April 2026 position derived from the 10-Q's cash-flow narrative and labelled as derived) · trailing metrics struck on the April 2026 quarter, confirmed by workingCapitalTTM of $13.573B matching the 10-Q's $13.6B · estimates 2026-08-04 · prices 2026-08-04, quote timestamp 2026-08-04T20:00:01Z, close $546.62, 50-day $547.80, 200-day $376.56, RSI 45.3 · knowledge-base claims 2026-08-04. Applied's fiscal year ends in late October, so fiscal 2025 covers roughly November 2024 to October 2025; every period reference in this dive is on the fiscal basis unless stated.
• Filings consulted: 10-K filed 2025-12-12 (FY2025, ended 2025-10-26); 10-Q filed 2026-02-19 (fiscal Q1 2026); 10-Q filed 2026-05-21 (fiscal Q2 2026, ended 2026-04-26); 8-K 2026-02-12 (Q1 earnings release cover); 8-K 2026-03-13 (annual meeting results — ten directors elected, KPMG ratified, no other material item); 8-K 2026-05-14 (Q2 earnings release cover). The 8-K exhibits carry the earnings release, not the call; management question-and-answer is not available on this data plan and is absent from this dive.
• Data rejections (detailed in Section 8): netDebt corrected from −$191M to NET CASH of $2.018B (omits $1.332B of short-term investments) with enterprise value rebuilt from $434.148B to $431.976B, a 0.5% correction we describe as immaterial; seg_prod flagged for mixing two segment presentations, with FY2024 and FY2023 rows short of reported revenue by $155M and $219M; capitalLeaseObligations of $495M identified as a capitalised operating lease rather than funded debt, on the 10-K's Contractual Obligations disclosure; ebitdaMarginTTM (38.4%), ebitMarginTTM (36.7%), evToEBITDATTM (38.96x) and netDebtToEBITDATTM rejected as built from pre-tax income including non-operating gains, with corrected operating EBITDA near $9.06B and EV/EBITDA near 47.7x; est EBITDA and EBIT rows rejected as corrupt in six of eight years, reporting EBIT above EBITDA; priceToFairValueTTM rejected as a mislabelled duplicate of price-to-book; tech and quote 52-week ranges reconciled in favour of the close-based tech series; tech.max_dd_from_peak rejected as identical to pct_from_hi and therefore not a true drawdown; earn_cal restated from report dates onto period-end dates.
• Basis note — the most important one in this dive: all forward multiples are struck on the non-GAAP consensus basis, because that is how the estimates are published. The GAAP-to-non-GAAP relationship on this name is unstable and reversed sign between fiscal 2025 and fiscal 2026: fiscal-2025 GAAP earnings per share of $8.66 against a consensus non-GAAP $9.37, versus fiscal Q2 2026 GAAP of $3.51 against a reported non-GAAP $2.86 — the latter despite the quarter absorbing a $253M export-control settlement, because non-operating equity-investment gains flow through GAAP. Trailing GAAP diluted earnings per share are $10.64 (51.4x); trailing non-GAAP are $9.89 (55.3x). The trailing GAAP multiple is reported for completeness and is not comparable across years.
• Estimate coverage: 26 analysts on fiscal-2026 revenue and 20 on earnings; 25 and 19 on fiscal 2027; 20 and 11 on fiscal 2028; 10 and 7 on fiscal 2029. Dispersion, not sample size, is the binding constraint: the fiscal-2028 earnings range is $14.55 to $27.02, a factor of 1.86, and the fiscal-2027 revenue range is $37.120B to $47.229B. The fiscal-2027 and fiscal-2028 rows are used as the primary forward anchors with the ranges printed alongside every point estimate.
• Peer note: the vendor peer block supplies price and market capitalisation only, with no earnings or multiples, so no peer-multiple comparison is drawn. Of the ten names supplied, KLA ($255.3B) and Lam Research ($397.4B) are direct comparables; Micron ($1.008T) and Intel ($509.1B) are customers; Intuit and ServiceNow are software companies with no business in this peer set; ASML, the fourth large equipment name, is absent. Cross-references to LRCX, KLAC, ASML, MU, INTC, AMD and MRVL use only the closing prices and day moves supplied for the 2026-08-04 batch.
• Fair-value caveat: the $365 / $570 / $765 anchors are multiples of published consensus non-GAAP earnings per share — 22x fiscal 2027 (bear), 25.1x fiscal 2029, which is today's fiscal-2028 multiple held constant while the anchor rolls forward one year (base), and 35.2x fiscal 2028 (bull) — each cross-checked against a second fiscal year. Stated arithmetic, not a discounted cash flow. The base is a no-re-rating construction, and the reason it lands only 4.3% above spot is that consensus fiscal-2029 earnings are only 4.3% above fiscal 2028. The bull case requires the market to keep paying 32-35x forward earnings into a period where consensus models 4.3% growth, and that is flagged as the fragile leg.
• Half-weight management framing: the growth outlook quoted from the 10-K and 10-Q — including "Investments by semiconductor equipment customers are expected to remain strong" and "Demand for services is expected to grow" — is management's own voice and is discounted accordingly. Filing-sourced facts (segment and geographic revenue, the $253M settlement, purchase obligations, buyback authorisation and spend, customer concentration) are treated as facts.
• Non-equity tripwire: checked and passed. Common stock on NASDAQ since 1980-03-17, price $546.62, beta 1.618, growing dividend of $1.91, 7.38M shares traded, and a 52-week band from $154.47 to $739.67. Not a preferred, not a baby bond, not a tracking unit.
• Timing: fiscal Q2 2026 was reported 2026-05-14 and the 10-Q filed 2026-05-21, 75 days before this dive, so the most recent quarter is fully in the data. Fiscal Q3 2026 is reported 2026-08-13, NINE DAYS after this dive, which is an explicit verdict and sizing input rather than a footnote. Prices are the 2026-08-04 close, on which Applied rose 5.48%.
• Not investment advice. Independent research, educational and informational only, never personalised. No recommendation to buy, sell or hold any security is made to any person.
• Version: 2026-08-04-full.