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Is AMAT a good stock to buy? We came across a bullish thesis on Applied Materials, Inc. on Rijnberk InvestInsights’s Substack by Daan | InvestInsights. In this article, we will summarize the bulls’ thesis on AMAT. Applied Materials, Inc.’s share was trading at $403.48 as of April 22nd. AMAT’s trailing and forward P/E were 40.44 and 36.23 respectively according to Yahoo Finance.
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Applied Materials, Inc. provides materials engineering solutions, equipment, services, and software to the semiconductor and related industries in the United States and internationally. AMAT delivered a strong fiscal Q1 2026 performance, reinforcing a bullish medium-term outlook despite elevated expectations following a 30% YTD rally. Revenue of $7.0 billion was slightly down year over year due to cyclical and China-related headwinds, yet reached the top end of guidance and exceeded consensus, while EPS of $2.38 also beat estimates.
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The weakness in growth was driven mainly by a sharp reduction in China exposure, falling from 45% to 27% of revenue over two years, and timing shifts in leading-edge demand rather than structural deterioration. Importantly, the services segment remained a standout, reaching a record $1.56 billion with double-digit growth, high margins, and recurring characteristics supported by a growing installed base and AI-enabled tools.
Gross margin expanded to 49.1%, while operating margin held at 30%, reflecting pricing strength and favorable mix despite higher R&D intensity. Free cash flow of $1 billion remained solid and fully covered dividends and buybacks, highlighting strong capital returns and a sub-15% payout ratio. Looking ahead, exceptionally strong Q2 and FY26 guidance signals accelerating demand driven by AI-related semiconductor complexity across logic, memory, and advanced packaging.
Applied Materials is increasingly positioned as a broad AI enabler across the semiconductor stack, benefiting from rising wafer starts, higher process intensity, and expanding HBM requirements. While often perceived as less concentrated than peers, its diversified exposure may provide a more durable growth runway. Supported by a strong balance sheet, expanding services momentum, and sustained AI-driven capex, the company appears well positioned for continued rerating upside.
Previously, we covered a bullish thesis on Applied Materials, Inc. (AMAT) by Long-Term Pick in March 2025, which highlighted its leadership in wafer fab equipment, AI-driven semiconductor demand, and growth from advanced packaging and gate-all-around transitions. AMAT’s stock price has appreciated by approximately 155.25% since our coverage. Daan | InvestInsights shares a similar view but emphasizes stronger Q1 2026 execution, resilient services growth, and a broader AI-driven rerating across the semiconductor stack.