Artificial intelligence is reshaping the semiconductor industry, but the AI boom is not only benefiting chip designers and manufacturers such as NVIDIA, TSMC, and SK hynix. Behind the development of increasingly powerful AI chips is a complex ecosystem of semiconductor manufacturing equipment companies that enable chipmakers to build smaller transistors, faster memory, and more advanced chip packages.
Applied Materials (NASDAQ: AMAT) is one of the most important companies in this ecosystem. The company supplies materials engineering and semiconductor manufacturing equipment used across leading-edge logic, DRAM, advanced packaging, and other semiconductor manufacturing processes. As AI chips become more complex, the amount of manufacturing technology required to produce them is also increasing.
Applied Materials is therefore positioned to benefit from several major semiconductor trends at the same time, including AI data-center expansion, leading-edge logic, high-bandwidth memory (HBM), Gate-All-Around (GAA) transistors, and advanced packaging. In fiscal 2026, the company's growth accelerated sharply, with third-quarter revenue reaching a record $9.12 billion, up 25% year over year.
Data Source: ASU News
What Is Applied Materials? Understanding the Semiconductor Equipment Company
Applied Materials is a U.S.-based semiconductor equipment company that develops systems used to manufacture and process semiconductor wafers and advanced chip packages. Unlike NVIDIA, which designs AI processors, or TSMC, which manufactures chips for customers, Applied Materials provides some of the equipment and materials engineering technologies required to produce those chips.
The company's equipment is used in processes such as deposition, etch, patterning, ion implantation, chemical mechanical planarization (CMP), and inspection and process control. These technologies allow semiconductor manufacturers to precisely build and modify the materials and structures that form modern transistors, interconnects, memory cells, and advanced packages.
Applied Materials operates primarily through several businesses, with Semiconductor Systems representing the company's largest segment and Applied Global Services providing recurring service and support revenue. In fiscal 2025, the company generated $28.4 billion in revenue, including $20.8 billion from Semiconductor Systems and $6.4 billion from Applied Global Services.
The importance of Applied Materials has increased as semiconductor manufacturing becomes more complicated. The transition from traditional FinFET transistors toward GAA architectures, the increasing use of HBM, and the development of 2.5D and 3D chip architectures all require more sophisticated materials engineering and process control.
Data Source: Semicorex
How Applied Materials Benefits From the AI Chip Boom
The AI boom affects Applied Materials differently from companies that sell GPUs or AI servers. Applied Materials benefits from the capital spending required to manufacture increasingly sophisticated chips.
AI processors require advanced logic nodes with extremely dense transistor structures. At the same time, AI systems require large amounts of high-bandwidth memory to move data quickly between processors and memory. This has increased investment in both leading-edge logic and DRAM/HBM production.
Advanced packaging is another important growth area. Modern AI accelerators increasingly integrate GPUs or other compute dies with HBM stacks and other chiplets inside a single package. This makes packaging considerably more complicated than conventional chip assembly.
Applied Materials has identified leading-edge foundry/logic, DRAM, and advanced packaging as three major growth areas for its semiconductor equipment business. The company expects these three markets to account for more than 80% of 2026 wafer-fabrication-equipment market growth. It also expects its advanced packaging revenue to grow more than 50% in calendar 2026.
The company has been expanding its product portfolio accordingly. In June 2026, Applied Materials introduced new systems targeting DRAM and advanced packaging, including equipment for HBM and 3D chip architectures. It also highlighted process-control and eBeam technologies designed for the manufacturing challenges associated with advanced packages.
The AI opportunity is therefore broader than simply selling equipment to GPU manufacturers. As AI chips become larger, faster, and more complex, chipmakers need additional manufacturing steps, tighter process control, and more advanced packaging technologies.
Applied Materials Financial Analysis: Revenue, Margins, and Cash Flow
Applied Materials entered the AI-driven semiconductor investment cycle from a relatively strong financial position. The company has historically generated substantial cash flow and maintained high operating margins, giving it the ability to invest in research and development while returning capital to shareholders.
In fiscal 2025, Applied Materials generated $28.4 billion of revenue, up 4% year over year. Non-GAAP gross margin reached 48.8%, while the company generated $5.7 billion in free cash flow. It returned approximately $6.3 billion to shareholders through dividends and share repurchases.
Growth accelerated significantly during fiscal 2026. In the third quarter, revenue reached a record $9.12 billion, up 25% year over year, while GAAP operating income increased to $3.08 billion. GAAP operating margin reached 33.7%, compared with 30.6% in the same quarter a year earlier.
Applied Materials Stock Performance and Valuation
Applied Materials stock has benefited significantly from the semiconductor and AI investment cycle, but its valuation has also become more sensitive to expectations for future growth. The stock experienced a strong rally during the first half of 2026 as investors increasingly priced in higher semiconductor equipment demand driven by AI infrastructure, advanced logic, and memory investment. AMAT reached a 52-week high of approximately $739.67 on June 30, 2026. By September 10, however, the stock had fallen to $454.01, approximately 39% below that 52-week high.
The decline illustrates an important characteristic of semiconductor equipment stocks: strong operating results do not necessarily guarantee a rising share price. Investors also evaluate whether future growth can justify the valuation already embedded in the stock.
Applied Materials reported record Q3 FY2026 revenue and raised expectations for semiconductor equipment growth, but its shares fell after the August earnings report as investors focused on competitive pressures and the high expectations surrounding AI-related growth. Reuters reported that the stock declined about 4% in early trading following the results.
For valuation, investors typically look beyond the current P/E ratio and consider expected earnings growth, free cash flow, semiconductor capital-expenditure cycles, and the company's competitive position in high-value equipment markets. As of September 2026, the central valuation question for AMAT is therefore whether the current AI investment cycle can support sustained growth in leading-edge logic, DRAM, HBM, and advanced packaging rather than representing only a short-term increase in semiconductor capital expenditure.
Data Source: Bitunix
How to Buy and Trade Applied Materials (AMAT) Stock
For investors looking to gain exposure to Applied Materials, the traditional approach is to purchase AMAT shares through a U.S. stock brokerage account. Investors generally need to open a brokerage account, complete identity verification, deposit funds, and then place an order to buy Applied Materials shares on Nasdaq. However, buying U.S. stocks directly may involve brokerage account requirements, cross-border fund transfers, and transaction fees. Traditional stock investing also primarily benefits investors when the stock price rises, which may limit flexibility when market expectations change.
Another option is to trade Applied Materials stock contracts through cryptocurrency trading platforms such as Bitunix. Compared with directly purchasing AMAT shares, stock contracts can provide more flexible ways to participate in the market. Traders can establish long positions when they expect Applied Materials' stock price to rise or short positions when they expect the stock to decline. Bitunix AMAT contracts offer leverage of up to 20x, allowing users to gain exposure to larger positions with less initial capital. Before trading, users need to register a Bitunix account and complete identity verification (KYC). As leveraged products can magnify both gains and losses, users should understand the relevant risks and manage their positions carefully.
