What Is The True Hidden Price Of Applied Materials Stock?
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Applied Materials (AMAT) shares trade at a steep 28.9 times adjusted profit for the twelve months to July 2026, even following a 26.9% drop in the past month. This figure adds after-tax stock-based pay to normalized net income. Investors buy shares for future earnings, however, and the valuation shifts when measured against the next two fiscal years. So what does $370.55 a share buy you in fiscal 2027 and fiscal 2028 profit?
Applied Materials’ Price On Expected Profit
At that price, Applied Materials trades at 20.1 times the analyst consensus forecast for fiscal 2027 profit. Against the fiscal 2028 forecast, the same share price equals 15.9 times profit, compared to the 28.9 times multiple recorded over the past twelve months. The 28.9 times adds back stock pay; analysts’ forecasts may not, so the comparison is approximate.
These multiples hold only if the company actually meets the forecast: net income of $14.6 billion in fiscal 2027 and $18.5 billion in fiscal 2028. For context, Applied reported net income of $7.0 billion for fiscal 2025, its most recently reported fiscal year.
What Applied Materials Must Deliver For That Price
The consensus forecast projects Applied will sell $46.9 billion in fiscal 2027, followed by a 22.0% increase in fiscal 2028. Because projected net income grows faster than sales in fiscal 2028, the company would retain a larger portion of each dollar it sells.
Applied’s sales growth is picking up toward that pace. Sales fell 2.1% from a year earlier in fiscal Q1 2026, then rose 11.4% in fiscal Q2 2026 and 24.8% in fiscal Q3 2026. Over the full twelve months to July 2026, sales grew 7.8%, so the pickup is recent. The fiscal 2027 forecast of $46.9 billion is 52% above the $30.8 billion Applied sold over those twelve months. For fiscal Q4 2026, management guided revenue to $10.25 billion, plus or minus $500 million, which it said would be up 51% from a year earlier.
Where Applied Materials Could Miss The Forecast
The margin is one place the consensus forecast could miss. In that forecast, Applied’s net margin is 31.2% in fiscal 2027 and 32.3% in fiscal 2028, while Applied reported a 24.7% net margin for fiscal 2025. Applied’s reported net margin was already 30.1% over the four quarters to July 2026, the highest of any quarter-end in our data, which starts in fiscal Q4 2016.
Management is confident it will keep widening gross margins, yet management also pointed to two costs. It expects its non-GAAP tax rate to go to about 13% in 2027, from about 11% in fiscal Q4 2026, as the global minimum tax takes effect. On the August 13, 2026 call, management also said it carries ramp costs as it hires more customer service engineers. Both would weigh on how much of each sales dollar Applied keeps as profit.
Sales could also arrive later than the forecast suggests. Management stated that over the longer term, Applied can grow only as fast as customers add clean room space, and the company is hiring so that it has the capacity to double its quarterly system output from current levels by 2028. If customers build out that space more slowly, the anticipated sales would be delayed. The fiscal 2028 forecast is also uncertain, with the highest EPS estimate at $31.28 and the lowest at $19.86.
If Applied hits the forecasted profit, the price on fiscal 2027 and 2028 profit offers a truer picture of what investors pay. A miss on margin or on the timing of sales would make the stock a riskier bet, priced on profit Applied may not reach. Applied is expected to report its fiscal Q4 2026 results in November 2026, and its net margin for that quarter is the figure to watch.
Does This Mean You Should Act On AMAT?
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