Here’s What Drove Applied Materials Stock’s 4x Rise Since 2018

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AMAT: Applied Materials logo
AMAT
Applied Materials

Applied Materials Inc. (NASDAQ: AMAT) stock price grew more than 4x from around $33 at 2018 end to $134 currently, driven primarily by an almost 3x jump in its P/S multiple. Additionally, a steady rise in revenues and a drop in the outstanding share count further helped boost the company’s share price.

In our interactive dashboard, Why Applied Materials Stock Moved: AMAT Stock Has Gained 309% Since 2018, we break down the factors behind this move.

(A) Applied Materials’ Total Revenue has grown 45% from $16.7 billion in 2018 to $24.2 billion on an LTM basis

  • Applied Materials’ total revenue first dropped from $16.7 billion in FY ’18 to $14.6 billion in FY ’19, as the semiconductor supply glut hampered sales.
  • However, driven by a revival in demand post the pandemic, sales have steadily risen to $24.2 billion on an LTM basis (Applied Materials’ fiscal year ends in October).
  • Semiconductor systems sales make up the bulk of Applied Materials’ revenues, with $6.68 billion of the company’s sales coming from this segment as of FY ’21, making up almost 60% of total revenue.
  • For details about Applied Materials’ revenues and comparison to peers, see Applied Materials (AMAT) Revenue Comparison
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(B) Revenue per share (RPS) increased more than 60% from $16.50 in 2018 to $27.25 currently

  • Applied Materials’ revenue rose from $16.7 billion in 2018 to $24.2 billion currently, while the outstanding share count decreased strongly from 1.01 billion in 2018 to 887 million currently.
  • Due to this, RPS has risen sharply from $16.50 in FY ’18 to $27.25 currently.

(C) Price-To-Sales (P/S) multiple for Applied Materials rose steadily from 1.7x in 2018 to 6x in 2021, but stands at 4.9x currently, still almost 3x higher than its 2018 level

  • Due to rising expectations around Applied Materials’ sales recovery since the pandemic and continuing demand growth for its products, its P/S multiple rose steadily to 6x in 2021.
  • However, amidst current geopolitical tensions dragging down the broader markets, the P/S multiple has pulled back and currently stands at a little under 5x.
  • For additional details about the company’s historical returns and comparison to peers, see Applied Materials (AMAT) Stock Return.

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Returns Mar 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 AMAT Return 0% -15% 315%
 S&P 500 Return 1% -7% 97%
 Trefis MS Portfolio Return 1% -9% 259%

[1] Month-to-date and year-to-date as of 3/18/2022
[2] Cumulative total returns since the end of 2016

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