Why Applied Materials Stock Jumped 90%?
Over the past year, Applied Materials (AMAT) nearly doubled its stock price, powered by a surge in AI-driven demand and breakthrough tech gains. Despite a slight margin dip, expanding gross margins and strategic shifts in geographic footholds hint at a confident pivot fueling this remarkable ascent from Feb 2025 to Feb 2026.
Below is an analytical breakdown of stock movement into key contributing metrics.
| 2132025 | 2132026 | Change | |
|---|---|---|---|
| Stock Price ($) | 182.4 | 354.9 | 94.5% |
| Total Revenues ($ Mil) | 27,176.0 | 28,368.0 | 4.4% |
| Net Income Margin (%) | 26.4% | 24.7% | -6.6% |
| P/E Multiple | 20.9 | 40.3 | 93.2% |
| Shares Outstanding (Mil) | 821.0 | 795.0 | 3.3% |
| Cumulative Contribution | 94.5% |
So what is happening here? The stock price nearly doubled, buoyed by a modest revenue rise and a sharp P/E multiple jump despite a slight dip in net income margin and fewer shares outstanding. Here’s what drove this shift.
Here Is Why Applied Materials Stock Moved
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- AI Compute Demand: Q1 FY2026 revenue guidance of $7.65B driven by AI, reflecting accelerating customer investment in AI-enabling chips.
- Leading-Edge Node Traction: Semiconductor Systems revenue in Q2 FY2025 rose 7% YoY, driven by strong adoption of Gate-All-Around and HBM technologies.
- Advanced Packaging Growth: Company is on track to double its advanced packaging business to $3 billion over next few years, signaling a new market opening.
- Gross Margin Expansion: Non-GAAP gross margin reached 49.2% in Q2 FY2025, highest since FY2000, indicating structural margin expansion from product mix.
- Geographic Diversification: China revenue contribution dropped to 25% in Q2 FY2025 from 43% YoY, while Korea and Taiwan shares expanded, reducing regional risk.
Current Assesment Of AMAT Stock
The core investment debate is centered around: The market prices in a powerful AI-driven recovery while current data shows decelerating orders, negative revenue growth, and tangible impact from US-China export controls.
The prevailing sentiment appears to be bearish. The AI narrative is strong, but the data is weak. Decelerating backlog, negative revenue growth, a quantified $600M China headwind, and a DOJ probe create significant drag. Current valuation is pricing in a recovery not yet visible in the numbers.
| Bull View | Bear View |
|---|---|
| The AI-driven demand for advanced chips is a multi-year supercycle. This will force customers to increase CapEx, overriding near-term headwinds and driving a strong H2 2026 recovery. | The declining backlog, quantified $600M China revenue impact, and ongoing DOJ investigation are being ignored. The stock’s high valuation is disconnected from these weakening fundamentals. |
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