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Should You Buy, Sell or Hold AMAT Stock at a P/S Valuation of 9.39X?
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Key Takeaways
Applied Materials expects logic, DRAM and HBM to be its fastest-growing WFE businesses in 2026.
AMAT benefits from AI-driven demand for hybrid bonding and advanced 3D chiplet packaging.
Applied Materials' broad portfolio helps integrate tools across processes and support margins.
Applied Materials (AMAT - Free Report) stock trades at a premium of 9.39X price-to-sales (P/S) multiple compared to the Electronics - Semiconductors industry’s P/S multiple of 8.95X. AMAT’s premium valuation is further justified by the Zacks Value Score of D.
AMAT Forward 12-Month (P/S) Valuation Chart
Image Source: Zacks Investment Research
The premium valuation is due to the rapid rise of AMAT’s stock price, which has climbed 59.8% year to date, outperforming the Zacks Computer and Technology sector and the broader industry’s return of 10.6% and 32.6%, respectively.
AMAT YTD Performance Chart
Image Source: Zacks Investment Research
Given the recent rise in stock price and the overvaluation, investors are wondering if this would be the right time to buy, sell or hold the stock. Let’s discuss the fundamentals and financials of the stock to uncover the next best move!
AMAT Gains From Rising Demand for Logic, DRAM and Packaging
Applied Materials expects its leading-edge foundry, logic, DRAM and high-bandwidth memory (HBM) to be the fastest-growing wafer fabrication equipment (WFE) businesses in 2026. In Logic, AMAT’s revenues are driven by the shift from FinFET to Gate-All-Around transistors and backside power delivery.
AMAT’s DRAM offerings are gaining traction as customers are aggressively investing in 6F² nodes supported by rising demand for high bandwidth memory DRAM, driven by AI workloads. On its first-quarter 2026 earnings call, AMAT highlighted its record growth in both Logic and DRAM segments, driven by major semiconductor transitions.
Applied Materials expects future generations of HBM to adopt hybrid bonding, and in the hybrid bonding space, AMAT is one of the leading innovators. AMAT’s advanced packaging, particularly 3D chiplet stacking, is another structural tailwind as AI chips become more heterogeneous. As chips are becoming more complex, wafer fabrication now involves multiple fabrication steps.
AMAT has the broadest and most diversified offerings as it provides solutions across multiple fabrication steps, like deposition, materials engineering, etch, metrology and packaging. While its competitors serve only one or two verticals. This has enabled Applied Materials to carve out a place for itself in the WFE market.
AMAT Beats Competition With a Comprehensive Portfolio
Applied Materials competes with KLA Corporation (KLAC - Free Report) , Lam Research (LRCX - Free Report) and Camtek (CAMT - Free Report) in the WFE and testing market. Applied Materials and KLA Corporation offer similar solutions, such as Wafer Inspection, Yield Enhancement and Process Control inspection systems, while Camtek stands at the forefront of semiconductor inspection and metrology solutions.
Camtek is focused on high-performance computing modules, advanced packaging and silicon carbide technologies. Lam Research develops Atomic Layer Deposition tools like AT200M, AT410 and AT650P that are similar to the devices made by Applied Materials. While Camtek, Lam Research and KLA Corporation overlap with Applied Materials, AMAT’s broad product portfolio enables it to seamlessly integrate its equipment across multiple processes.
Applied Materials’ integration of equipment across multiple processes reduces reliance on any single technology cycle and enables it to price its product stack better to protect margins. The Zacks Consensus Estimate for AMAT’s fiscal 2026 earnings implies growth of 18.3%. The estimates have been revised downward in the past seven days.
Image Source: Zacks Investment Research
Conclusion: Buy AMAT Stock Now
The three most critical growth pillars for AMAT are DRAM, logic and advanced packaging, all driven by AI. DRAM has grown to contribute 34% to AMAT’s Semiconductor Systems revenues, rising from the massive equipment intensity, which has made its DRAM business the fastest growing business in 2025. The breadth of its portfolio helps it offer a complete package to its customers, making it a one-stop shop. Given these conditions, we suggest that investors should buy this Zacks Rank #2 (Buy) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Should You Buy, Sell or Hold AMAT Stock at a P/S Valuation of 9.39X?
Key Takeaways
Applied Materials (AMAT - Free Report) stock trades at a premium of 9.39X price-to-sales (P/S) multiple compared to the Electronics - Semiconductors industry’s P/S multiple of 8.95X. AMAT’s premium valuation is further justified by the Zacks Value Score of D.
AMAT Forward 12-Month (P/S) Valuation Chart
Image Source: Zacks Investment Research
The premium valuation is due to the rapid rise of AMAT’s stock price, which has climbed 59.8% year to date, outperforming the Zacks Computer and Technology sector and the broader industry’s return of 10.6% and 32.6%, respectively.
AMAT YTD Performance Chart
Image Source: Zacks Investment Research
Given the recent rise in stock price and the overvaluation, investors are wondering if this would be the right time to buy, sell or hold the stock. Let’s discuss the fundamentals and financials of the stock to uncover the next best move!
AMAT Gains From Rising Demand for Logic, DRAM and Packaging
Applied Materials expects its leading-edge foundry, logic, DRAM and high-bandwidth memory (HBM) to be the fastest-growing wafer fabrication equipment (WFE) businesses in 2026. In Logic, AMAT’s revenues are driven by the shift from FinFET to Gate-All-Around transistors and backside power delivery.
AMAT’s DRAM offerings are gaining traction as customers are aggressively investing in 6F² nodes supported by rising demand for high bandwidth memory DRAM, driven by AI workloads. On its first-quarter 2026 earnings call, AMAT highlighted its record growth in both Logic and DRAM segments, driven by major semiconductor transitions.
Applied Materials expects future generations of HBM to adopt hybrid bonding, and in the hybrid bonding space, AMAT is one of the leading innovators. AMAT’s advanced packaging, particularly 3D chiplet stacking, is another structural tailwind as AI chips become more heterogeneous. As chips are becoming more complex, wafer fabrication now involves multiple fabrication steps.
AMAT has the broadest and most diversified offerings as it provides solutions across multiple fabrication steps, like deposition, materials engineering, etch, metrology and packaging. While its competitors serve only one or two verticals. This has enabled Applied Materials to carve out a place for itself in the WFE market.
AMAT Beats Competition With a Comprehensive Portfolio
Applied Materials competes with KLA Corporation (KLAC - Free Report) , Lam Research (LRCX - Free Report) and Camtek (CAMT - Free Report) in the WFE and testing market. Applied Materials and KLA Corporation offer similar solutions, such as Wafer Inspection, Yield Enhancement and Process Control inspection systems, while Camtek stands at the forefront of semiconductor inspection and metrology solutions.
Camtek is focused on high-performance computing modules, advanced packaging and silicon carbide technologies. Lam Research develops Atomic Layer Deposition tools like AT200M, AT410 and AT650P that are similar to the devices made by Applied Materials. While Camtek, Lam Research and KLA Corporation overlap with Applied Materials, AMAT’s broad product portfolio enables it to seamlessly integrate its equipment across multiple processes.
Applied Materials’ integration of equipment across multiple processes reduces reliance on any single technology cycle and enables it to price its product stack better to protect margins. The Zacks Consensus Estimate for AMAT’s fiscal 2026 earnings implies growth of 18.3%. The estimates have been revised downward in the past seven days.
Image Source: Zacks Investment Research
Conclusion: Buy AMAT Stock Now
The three most critical growth pillars for AMAT are DRAM, logic and advanced packaging, all driven by AI. DRAM has grown to contribute 34% to AMAT’s Semiconductor Systems revenues, rising from the massive equipment intensity, which has made its DRAM business the fastest growing business in 2025. The breadth of its portfolio helps it offer a complete package to its customers, making it a one-stop shop. Given these conditions, we suggest that investors should buy this Zacks Rank #2 (Buy) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.