DCF Studio

    AMAT · NMS · Technology

    Applied Materials, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 333.77

    Market price

    USD 374.53

    Implied upside

    -10.9%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-10-31

    AdjustedCapital expenditure runs at 4.9% of revenue against depreciation of 1.7%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Current EV/EBITDA of 33.2x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 333.77-10.9%
    Exit multiple
    USD 579.60+54.8%
    Market price
    USD 374.53

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn18bn36bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 34.2bnUSD 46.4bnUSD 60.9bnUSD 77.4bnUSD 95.3bnUSD 113.4bnUSD 130.2bnUSD 144.2bnUSD 153.7bnUSD 157.6bn+18.5%
    EBITUSD 10.1bnUSD 13.7bnUSD 17.9bnUSD 22.8bnUSD 28.1bnUSD 33.4bnUSD 38.4bnUSD 42.5bnUSD 45.3bnUSD 46.4bn+18.5%
    NOPATUSD 8.8bnUSD 11.9bnUSD 15.6bnUSD 19.8bnUSD 24.4bnUSD 29.0bnUSD 33.4bnUSD 36.9bnUSD 39.4bnUSD 40.4bn+18.5%
    Add depreciation & amortisationUSD 568.5mUSD 769.8mUSD 1.0bnUSD 1.3bnUSD 1.6bnUSD 1.9bnUSD 2.2bnUSD 2.4bnUSD 2.6bnUSD 2.6bn+18.5%
    Less capital expenditureUSD -1.7bnUSD -2.2bnUSD -2.8bnUSD -3.5bnUSD -4.2bnUSD -4.9bnUSD -5.5bnUSD -5.9bnUSD -6.1bnUSD -6.1bn+15.5%
    Capex, % of revenue4.9%4.8%4.7%4.6%4.4%4.3%4.2%4.1%4.0%3.9%-
    Less increase in working capitalUSD -2.0bnUSD -4.2bnUSD -5.0bnUSD -5.7bnUSD -6.2bnUSD -6.2bnUSD -5.8bnUSD -4.8bnUSD -3.3bnUSD -1.3bn-4.6%
    Free cashflow to firmUSD 5.6bnUSD 6.3bnUSD 8.8bnUSD 11.9bnUSD 15.6bnUSD 19.8bnUSD 24.2bnUSD 28.6bnUSD 32.5bnUSD 35.5bn+22.7%
    Discount factor0.94970.85650.77240.69660.62820.56660.51100.46080.41560.3748-
    Present valueUSD 5.4bnUSD 5.4bnUSD 6.8bnUSD 8.3bnUSD 9.8bnUSD 11.2bnUSD 12.4bnUSD 13.2bnUSD 13.5bnUSD 13.3bn-
    Present Value Of The ForecastUSD 99.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta1.451Reported 1.673, pulled toward 1.0 (Blume)
    Cost of equity11.03%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 31.5x interest cover. Book interest / average debt was lower, at 3.9%.
    Market capitalisationUSD 297.2bn97.7% of capital
    Total debtUSD 7.0bn2.3% of capital, book value as a proxy
    Tax rate13.0%Effective, capped at statutory
    WACC10.88%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 333.77

    63% of EV

    Forecast FCFF, final year
    USD 35.5bn
    Capex at depreciation, working capital in reinvestment
    USD 40.4bn
    Less reinvestment at g/ROIC (8.7% of NOPAT)
    USD -3.5bn
    Capitalised
    USD 36.9bn
    ROIC (reported)
    28.8%
    Terminal value, undiscounted
    USD 450.8bn
    Terminal value, discounted
    USD 169.0bn
    Enterprise value
    USD 268.2bn
    Less net debt
    USD -1.5bn
    Equity value
    USD 269.7bn

    Exit at 20.0x EBITDA

    Value per shareUSD 579.60

    79% of EV

    Terminal value, undiscounted
    USD 980.8bn
    Terminal value, discounted
    USD 367.6bn
    Enterprise value
    USD 466.8bn
    Less net debt
    USD -1.5bn
    Equity value
    USD 468.3bn

    Spread between methods: 54%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    8.88%432.63447.61465.17485.98510.94
    9.88%369.26378.97390.19403.25418.59
    10.88%320.05326.45333.77342.19351.93
    11.88%280.89285.11289.92295.42301.73
    12.88%249.07251.84254.99258.58262.69

    Outlined: this model. Green text: above today's price of 374.53. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year3.2%18.7%20.3%
    EBIT margin30.2%29.5%32.7%
    Discount rate-10.9%10.1%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.