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Featured Article from MarketBeat Applied Materials: Up 40% in 2025 With Room to Run Long-TermWritten by Leo Miller. Published 11/20/2025. 
Key Points - Applied Materials has had a year of ups and downs. The stock has recovered mightily since tanking in August.
- Despite experiencing sales growth of only 4%, the company's shares have increased by 40% in 2025.
- With sales likely to recover, AMAT shares still appear to be a solid long-term investment.
Despite a total return of 40%, some investors may view Applied Materials (NASDAQ: AMAT) as underperforming in 2025. The tech stock has lagged several of its semiconductor equipment peers — for example, Lam Research (NASDAQ: LRCX) has returned 107%. Applied Materials recently reported its latest financial results. Although it has underperformed some industry peers this year, it remains a solid play in semiconductor manufacturing equipment going forward. AMAT Beats Low Expectations in Q4 While many are busy chasing the usual AI trends, a bigger opportunity is quietly brewing—and most are missing it. Imagine a major shift in how and where AI is built, opening up incredible wealth opportunities for those in the know.
I've found 9 AI companies primed to lead this change. These aren't the tired "AI hype" stocks; they're companies with real US operations, proven revenue growth, and deep AI integration. I've put all the details in a FREE report: "Top 9 AI Stocks For This Month." Applied's Q3 fiscal year 2025 (FY2025) earnings report — note that Applied's fiscal year is one quarter ahead of calendar-year reporting — included weaker-than-expected guidance for Q4. Shares fell 14% on Aug. 15 after that guidance implied revenue would decline nearly 5% year over year versus Wall Street's forecast for about 4% growth. The company also projected adjusted earnings per share (EPS) would fall about 9%, while analysts had expected roughly a 3% increase. At the time, peers' outlooks looked more encouraging. When Applied reported Q4 FY2025 results on Nov. 13, it actually performed slightly better than the low bar that had been set. Sales declined 3.5% to $6.8 billion, and adjusted EPS fell 6.5% — both modest beats. The prior guidance had already lowered expectations, so the upside was limited. Applied's guidance for Q1 FY2026 also modestly topped expectations, though it still implied significant year-over-year declines in both sales and adjusted EPS. The stock rose about 1% on Nov. 14. China Risk Looks Subdued Moving Forward China has been a major overhang on Applied's business because export restrictions have materially reduced the company's addressable market there. That was especially frustrating given that China's wafer fabrication equipment (WFE) spending was unusually strong, leaving Applied unable to fully participate. Looking ahead, Applied does not expect additional export restrictions and has already absorbed the effects of previous ones. The company expects China revenues to continue declining in 2026 as the market works through excess capacity, but incremental China-related risk appears limited. Applied anticipates total revenue will grow only modestly in the first half of calendar 2026 and then accelerate in the second half. Applied's Outlook Remains Favorable Despite Underperformance Applied's 40% total return has noticeably underperformed its WFE peers in 2025. Total returns for three prominent competitors are: Applied's last-12-month (LTM) revenue growth of 4.4% is the weakest among these companies; the others are in the 22%–26% range. Applied's product mix has caused it to participate less in some of the strongest near-term trends. For instance, the NAND memory equipment market is expected to roughly double by 2025, yet NAND accounted for only 6% of Applied's sales last quarter compared with about 18% of Lam's sales. Meanwhile, leading-edge foundry and logic investments have skewed toward advanced lithography, an area where ASML has a near-monopoly and Applied does not compete. These differences reflect the cyclical nature of the WFE industry: demand shifts between equipment types over time. Nonetheless, overall spending across equipment categories must rise for technology to advance, and strong demand at other WFE companies suggests that spending could eventually flow back to Applied. The company isn't losing its competitive edge; it is experiencing a cyclical dip. Over the past decade, these four firms have grown their LTM free cash flow at a compound annual rate near 20%, supporting the view that Applied's growth could converge toward its peers over the long term. The market appears to recognize this dynamic, which helps explain Applied's meaningful appreciation in 2025. Its forward price-to-earnings (P/E) ratio is near 24x — about 27% above its three-year average forward P/E. Applied may no longer look like the bargain it was several months ago, but its long-term fundamentals remain solid despite soft near-term sentiment.
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