QS Research · Michael Burry's Scion Capital analyst template · 2006
APPLIED MATERIALS INC /DE (AMAT)
As of 2026-11-08 · 13/15 boxes filled from SEC filings and market data
Conclusion: WATCH
Conviction medium · base case -22% · downside -37% · upside -10%
At today's 27.0x EV/EBITDA, the FY2020-FY2025 normalized EBITDA of $7.57B plus $2.79B net cash gives about $261/share, -21.5% versus the $332.71 close on 2026-11-06; on TTM EBITDA of $9.67B the same multiple gives about $333, essentially today's price. The market is not missing the record Q3 FY2026 results; it is capitalizing near-peak TTM EBITDA at a full multiple, while normalized earnings power supports materially less. The record Q3 FY2026 revenue of $9.115B, 33.7% operating margin, Q4 FY2026 guidance of $10.25B +/- $500M revenue and $4.02 +/- $0.20 non-GAAP EPS, plus $2.79B net cash, are why this is not a short despite the unfavorable normalized risk/reward. I would need either a price closer to the $261 normalized base or evidence that $9B-plus EBITDA is the new cycle average before turning long.
Key numbers
- Share price: $332.71
- Market cap: $264.04B
- Latest financial period: TTM to Jul 26, 2026
- Revenue (TTM): $30.84B
- EV / EBITDA (TTM): 27.0x
- P/E (TTM): 28.5x
- Price / book: 10.30x
The 15 boxes
- ✓ 1. Long-form business notes
AMAT makes money by selling wafer-fabrication equipment and related services, spares and factory-automation software; the FY2025 10-K reports two segments, Semiconductor Systems (largest contributor to net revenue) and AGS. The oldest 10-K here, FY2020, had three segments including Display and Adjacent Markets; by FY2025 display is in Corporate and Other, and the 200mm equipment business moves from AGS to Semiconductor Systems in Q1 FY2026. Revenue was $17.20B in FY2020 and $28.37B in FY2025; FY2025 operating income was $8.29B and operating cash flow was $7.96B.
- ✓ 2. Competitive advantage
The advantage is scale plus a broad differentiated equipment portfolio, not a single patent or licence: revenue rose every year in the six fiscal years shown, from $17.20B (FY2020) to $28.37B (FY2025), while gross margin went from 44.7% to 48.7% and operating margin from 25.4% to 29.2% (computed from the XBRL revenue, gross profit and operating income lines). Cash conversion is strong - $7.96B operating cash flow against $2.26B capex in FY2025 - and management states that many products have strong competitive positions, but it offers no share or pricing data. The filings also show the limits: a concentrated, largely non-US customer base and competitors running from single-product regional vendors to global diversified firms, with services exposed to third-party providers and customer self-service.
- ✓ 3. 10-Q takeaways
Q3 FY2026 (quarter ended July 26, 2026) revenue was a record $9.115B, up 25% from $7.302B, with GAAP gross margin 50.3% and operating margin 33.7%; nine-month revenue was $24.037B, up 11%. Cash and investments were $14.501B at July 26, 2026, nine-month operating cash flow was $5.568B, and the company paid $1.2B for buybacks and $1.2B in dividends in the nine months. The Q3 earnings release guides Q4 FY2026 revenue to $10.25B +/- $500M and non-GAAP diluted EPS to $4.02 +/- $0.20.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ✓ 11. Impression of the shareholder letter
Filled; members read this box.
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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