Applied Materials Stock’s Winning Streak May Not Be Over Yet

We think Applied Materials (AMAT) stock might be a good investment candidate. Why? Because you get strong margin, low-debt capital structure, and strong momentum – with room to run as the stock is meaningfully below its 52-week high.

There Are Several Things In Favor Of AMAT Stock

AMAT stock can run given its good fundamentals and the fact that it is 11% below its 52-week high.

Applied Materials sustains strong margins through demand for advanced packaging and new chip manufacturing products, including recurring revenue from its Applied Global Services segment beginning Q1 2026. A low debt-to-equity ratio of 0.32 reflects disciplined capital management. While Q4 2025 revenue saw a dip partly due to China trade restrictions, management anticipates H2 2026 growth from AI-driven demand and improved customer order visibility. This momentum is also reflected in recent stock highs.

And Its Fundamentals Look Good

• Long-Term Profitability: About 30.9% operating cash flow margin and 29.2% operating margin last 3-year average.
• Strong Momentum: Currently in the top 10th percentile of stocks in terms of “trend strength” – our proprietary momentum metric.
• Revenue Growth: Applied Materials saw revenue growth of 4.4% LTM and 3.2% last 3-year average, but this is not a growth story
• Room To Run: Despite its momentum, AMAT stock is trading 11% below its 52-week high.

Below is a quick comparison of AMAT fundamentals with S&P medians.

*LTM: Last Twelve Months

But Be Wary Of The Risks

While AMAT stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. AMAT fell 76% during the Dot-Com crash, 64% in the Global Financial Crisis, and 55% during the Inflation Shock. Even the milder pullbacks in 2018 and the Covid crash still triggered declines over 43% and 52%. Solid fundamentals don’t make it immune. When the market sells off hard, AMAT takes a hit like most others. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read AMAT Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

If you want to see more details, read Buy or Sell AMAT Stock.

AMAT Is Just One of Several Such Stocks

You could also check out:

1. Lam Research (LRCX)
2. KLA (KLAC)
3. Amphenol (APH)

We chose these stocks using the following criteria:

1. Greater than $2 Bil in market cap
2. High operating or (cash flow from operations) margins
3. No instance of very large revenue decline in the past 5 years
4. Low-debt capital structure
5. Strong momentum

A portfolio that was built starting 12/31/2016 with stocks that fulfill the criteria above would have performed as follows:

• Average 12-month forward returns of nearly 15%
• 12-month win rate (percentage of picks returning positive) of about 60%

Why Stock Pickers Win More With Multi Asset Portfolios

Markets move differently but a mix of assets smooths volatility. A multi asset portfolio keeps you invested and reduces the impact of sharp drops in any single area.

The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices