APPLIED MATERIALS INC /DE

Wafer-fab-equipment leader with elite returns and free cash flow, riding AI-driven demand; only modest growth this year and China export exposure temper it.

Strengths

• Elite profitability and returns — operating margin 29.2% (90th), ROE 34.3% (92nd), ROA 19.3% (95th)
• Elite free cash flow — FCF $5.70B (96th), net margin 24.7% (86th)
• Durable WFE franchise with AI tailwind — MD&A frames AI as a significant demand driver for its served markets

Risks

• Modest growth and flat earnings this year — revenue +4.4% (32nd), net income -2.5% (52nd)
• WFE cyclicality — risk factors stress the historically cyclical, hard-to-predict nature of semiconductor capital spending
• China export-control exposure — trade restrictions cited as a material risk to its large China revenue base

Notable findings

• Fund exitedNotable fund(s) exited this quarter: VANGUARD GROUP INC
• Customer concentration~89% of revenue from one customer/distributor — In fiscal 2025, approximately 89% of our net revenue was to customers in regions outside the United States
• Buying back stockNet buyback — share count -3%/yr over 4y
• Strong balance sheetStrong balance sheet — $12.9B cash & investments
• Notable holderHeld by 6 notable fund(s): STATE STREET CORP, GOLDMAN SACHS GROUP INC, FMR LLC +3 more (as of 2026-03-31)
• China exposureonly modest growth this year and China export exposure temper it
• Insider sellingInsider selling — 35 open-market sale(s) by 8 insider(s) (cluster of 8 insiders, ~$119M, last 6mo) Form 4 ↗