CompetitorsNarrow moat

Applied Materials (AMAT) — moat facet

Applied's main rival is now worth more than it is, and its best competitive opening is the step ASML sells and it does not.

Applied's annual report does not name its competitors. It describes them by type: "Competitors range from small companies that compete in a single region, which may benefit from policies and regulations that favor domestic companies, to global, diversified companies"1. The third-party ranking is more specific. TechInsights says ASML led the industry in 2025 with $27.5 billion of revenue, and that Applied Materials, Lam Research, Tokyo Electron and KLA completed the top five, unchanged from 20242.

Semiconductor Systems operating margin (%)34.9%FY202335.5%FY202537.7%Q3 FY2026Applied Materials Form 10-K FY2025 segment note; Q3 FY2026 results release
The equipment margin is rising while the rivals are growing, so the shared steps are not being lost.

The rivals that matter are four different kinds of relationship. Lam Research is a direct rival in the steps both companies sell, and the market now values it above Applied3. ASML sells the one major step Applied does not, so its success is Applied's opportunity rather than its loss. Tokyo Electron and other non-American rivals gain whenever American export rules stop Applied from selling, which the 10-K acknowledges4. And Besi, a Dutch packaging-equipment maker, is a company Applied chose to invest in rather than compete with5. The domestic Chinese toolmakers are covered under the moat's dangers, and KLA under the inspection page.

Competition in this industry is decided at the qualification stage, when a chipmaker chooses which tool to build a new step around. Price wars are rare because a cheaper tool that lowers yield costs the customer far more than it saves.

The rivalry is also visible in what investors will pay. Applied's forward P/E was 26.95 in September 20266, against a trailing 40.9, and its price-to-sales ratio 12.207. The market rewards Applied's peers more for each dollar of profit, and the reasons given in these pages, China and customer concentration, are ones Applied can change only slowly.

The field Applied competes in has not been reshuffled for years. The top five equipment suppliers were the same in 2024 and 20258. Applied's one large attempt to buy a rival, Kokusai Electric, was terminated in fiscal 2021 at a cost of a $154 million fee9, which left the field as it was.

Applied is holding its ground on the measure that matters: its Semiconductor Systems margin rose to 37.7% in the quarter to July 202610. A fall in that margin while the market grows would be the sign that rivals are winning the steps that pay.

Moat trajectory: Holding steady

Top five unchanged in 2025; systems margin rising.

The number that tests this moat
Reported
Trailing P/E against the three largest peers
Applied 40.9 against KLA 52.7, Lam Research 57.7 and ASML 53.8 (September 2026)

How the market ranks Applied among its rivals; closing the gap would mean investors see its position improving.

Source: AMAT P/E history (companiesmarketcap) ↗
Dig deeper
DIG DEEPER 01
Lam Research: The Rival Now Worth More
Lam Research is worth $8 billion more than Applied and trades at 57.7 times earnings against Applied's 40.9.
DIG DEEPER 02
ASML: The Step Applied Does Not Sell
ASML sells the one step Applied does not, so every lithography tool it sells creates work for Applied's machines.
DIG DEEPER 03
Tokyo Electron and the Rivals Export Rules Favour
American export rules can hand Applied's Chinese orders to Tokyo Electron and other non-American rivals, and Applied says so itself.
DIG DEEPER 04
Besi: The Partner It Owns 9% Of
Applied bought 9% of Besi so that it shares in hybrid bonding without having to build the bonding tools itself.
References
  1. ReportedIt describes them by type: "Competitors range from small companies that compete in a single region, which may benefit from policies and regulations that favor domestic companies, to global, diversified companies".
    Applied Materials Form 10-K for fiscal 2025 (year ended 26 October 2025) - Item 1A risk factors: competition, export controls, customer concentration, backlog and the EPIC Center. — FY2025 · publ. 12 December 2025 · source ↗
  2. ReportedTechInsights says ASML led the industry in 2025 with $27.5 billion of revenue, and that Applied Materials, Lam Research, Tokyo Electron and KLA completed the top five, unchanged from 2024.
    TechInsights, top IC manufacturing equipment suppliers 2025 - ASML led with $27.5 billion of revenue; Applied Materials, Lam Research, Tokyo Electron and KLA completed the top five, unchanged from 2024. — 2025 · publ. 2026 · source ↗
  3. ReportedLam Research is a direct rival in the steps both companies sell, and the market now values it above Applied.
    Applied Materials market capitalisation history - calendar year-end values 2015-2025, and peer market values on 24 September 2026 (KLA $246.05B, ASML $662.45B). — 2015-2026 · publ. 24 September 2026 · source ↗
  4. ReportedTokyo Electron and other non-American rivals gain whenever American export rules stop Applied from selling, which the 10-K acknowledges.
    Applied Materials Form 10-K for fiscal 2025 (year ended 26 October 2025) - Item 1A risk factors: competition, export controls, customer concentration, backlog and the EPIC Center. — FY2025 · publ. 12 December 2025 · source ↗
  5. ReportedAnd Besi, a Dutch packaging-equipment maker, is a company Applied chose to invest in rather than compete with.
    Applied Materials Form 8-K exhibit 99.1 - purchase of 9 percent of the outstanding shares of BE Semiconductor Industries N.V. (Besi); hybrid-bonding collaboration since 2020. — April 2025 · publ. 14 April 2025 · source ↗
  6. ReportedApplied's forward P/E was 26.95 in September 2026, against a trailing 40.9, and its price-to-sales ratio 12.20.
    Applied Materials (AMAT) statistics - forward P/E 26.95, P/S 12.20, P/B 14.69, 793.60M shares, 52-week change +136.10%. — September 2026 · publ. 24 September 2026 · source ↗
  7. ReportedApplied's forward P/E was 26.95 in September 2026, against a trailing 40.9, and its price-to-sales ratio 12.20.
    Applied Materials (AMAT) statistics - forward P/E 26.95, P/S 12.20, P/B 14.69, 793.60M shares, 52-week change +136.10%. — September 2026 · publ. 24 September 2026 · source ↗
  8. ReportedThe top five equipment suppliers were the same in 2024 and 2025.
    TechInsights, top IC manufacturing equipment suppliers 2025 - ASML led with $27.5 billion of revenue; Applied Materials, Lam Research, Tokyo Electron and KLA completed the top five, unchanged from 2024. — 2025 · publ. 2026 · source ↗
  9. ReportedApplied's one large attempt to buy a rival, Kokusai Electric, was terminated in fiscal 2021 at a cost of a $154 million fee, which left the field as it was.
    Applied Materials Form 10-K for fiscal 2022 - segment results for FY2020-FY2022 including Display and Adjacent Markets, employees, China revenue, the Kokusai termination fee and backlog. — FY2022 · publ. December 2022 · source ↗
  10. Moat Explorer calcApplied is holding its ground on the measure that matters: its Semiconductor Systems margin rose to 37.7% in the quarter to July 2026.
    Moat Explorer calculation from Applied Materials' reported figures ($ millions unless stated). Segment shares FY2025: Semiconductor Systems 20,798 / 28,368 = 73.3%; Applied Global Services 6,385 / 28,368 = 22.5%; Corporate and Other 1,185 / 28,368 = 4.2%. Segment operating margins FY2025: 7,379 / 20,798 = 35.5%; 1,792 / 6,385 = 28.1%; FY2024 6,981 / 19,911 = 35.1%, 1,812 / 6,225 = 29.1%; FY2023 6,879 / 19,698 = 34.9%, 1,529 / 5,732 = 26.7%. Q3 FY2026 margins: Semiconductor Systems 2,657 / 7,040 = 37.7%; Applied Global Services 536 / 1,781 = 30.1%; company operating margin 3,075 / 9,115 = 33.7%. Q1 FY2026 Semiconductor Systems 1,427 / 5,141 = 27.8%. Nine months FY2026 6,176 / 18,146 = 34.0% and 1,461 / 5,005 = 29.2%. Growth Q3 FY2026: Semiconductor Systems 7,040 / 5,564 - 1 = 26.5% year on year and 7,040 / 5,965 - 1 = 18.0% on the quarter; Applied Global Services 1,781 / 1,463 - 1 = 21.7%; revenue 9,115 / 7,910 - 1 = 15.2% on the quarter; United States revenue 1,367 / 683 - 1 = 100%; Europe 483 / 160 = 3.0 times. Nine months: 18,146 / 16,562 - 1 = 9.6%; 5,005 / 4,236 - 1 = 18.2%. Segment history, revenue: Semiconductor Systems 11,367 (FY2020), 16,286, 18,797, 19,698, 19,911, 20,798 (FY2025), compound growth (20,798 / 11,367)^(1/5) - 1 = 12.8% a year; Applied Global Services 4,155, 5,013, 5,543, 5,732, 6,225, 6,385, compound growth (6,385 / 4,155)^(1/5) - 1 = 9.0% a year, 6,385 / 5,732 - 1 = 11.4% over two years; Corporate and Other including Display 1,607 + 73 = 1,680 (FY2020), 1,634 + 130 = 1,764 (FY2021), 1,331 + 114 = 1,445 (FY2022), 868 + 219 = 1,087, 885 + 155 = 1,040, 1,185 (FY2025); 1,185 / 1,680 - 1 = -29%. Display operating margin 235 / 1,060 = 22% (FY2025) and 51 / 885 = 6% (FY2024). DRAM equipment 26% x 20,798 = about 5,400; flash 7% x 20,798 = about 1,460. Company margins: gross 13,808 / 28,368 = 48.7% (FY2025), 12,897 / 27,176 = 47.5% (FY2024), 12,384 / 26,517 = 46.7% (FY2023); operating 8,289 / 28,368 = 29.2%. R&D 3,570 / 28,368 = 12.6%; 3,570 / 1,451 = 2.5 times (FY2015-FY2025). Effective tax 2,273 / 9,271 = 24.5% (FY2025) and 975 / 8,152 = 12.0% (FY2024). Revenue FY2019 14,608 / 16,705 - 1 = -12.6%. Diluted shares 808 / 1,226 - 1 = -34%. Revenue outside the United States 25,305 / 28,368 = 89%. China share of revenue: 5,456 / 17,202 = 31.7% (FY2020); 7,535 / 23,063 = 32.7%; 7,254 / 25,785 = 28.1%; 7,247 / 26,517 = 27.3%; 10,117 / 27,176 = 37.2% (FY2024); 8,529 / 28,368 = 30.1% (FY2025). Taiwan 6,857 / 4,010 - 1 = 71%. Two largest customers 19% + 15% = 34% (FY2025) and 20% + 14% = 34% (nine months FY2026). Backlog: 15,002 / 19,011 - 1 = -21% (October 2022 to October 2025); Semiconductor Systems 7,105 / 12,691 - 1 = -44%; Applied Global Services 7,141 / 5,643 - 1 = +27%; shares of backlog 7,141 / 15,002 = 48% and 7,105 / 15,002 = 47%. Contract liabilities 3,271 / 2,566 - 1 = +27%; receivables 7,691 / 5,185 - 1 = +48%. Cash: net cash 7,241 + 1,332 - 100 - 6,455 = 2,018 (October 2025); 8,022 + 1,449 - 799 - 5,460 = 3,212 (October 2024); 7,037 + 2,196 - 1,299 - 5,245 = 2,689 (July 2026). Payout 1,384 / 6,998 = 19.8%; dividends plus buybacks 1,384 + 4,893 = 6,277, 6,277 / 7,958 = 79% of operating cash flow. ROE 6,998 / ((20,415 + 19,001) / 2) = 35.5% (FY2025), 40.6% (FY2024), 48.0% (FY2023). Trailing twelve months to July 2026: revenue 6,800 + 24,037 = 30,837; net income 1,897 + 7,370 = 9,267; operating cash flow 2,828 + 5,568 = 8,396; capital expenditure 785 + 1,988 = 2,773. Implied FY2026 revenue at the guidance midpoint 24,037 + 10,250 = 34,287, 34,287 / 28,368 - 1 = 20.9%; fourth-quarter midpoint 10,250 / 6,800 - 1 = 50.7%; implied non-GAAP EPS 8.73 + 4.02 = 12.75. Market: 376,360 / 9,267 = 40.6 times trailing earnings; 376,360 / 30,837 = 12.2 times sales; price 474.25 / 723.00 - 1 = -34.4%; Lam Research 384.36 - 376.36 = 8.00 bn more market value. ASML 662.45 / 376.36 = 1.8 times; KLA 246.05 / 376.36 = 0.65. Calendar year-end 2025 P/E 203,780 / 6,998 = 29.1; fiscal year-end P/E 40.91 / 11.83 = 3.5 times the FY2022 low. Other: services growth FY2025 6,385 / 6,225 - 1 = 2.6%; company revenue 28,368 / 27,176 - 1 = 4.4%; dividends 1,384 / 7,958 = 17.4% of operating cash flow; two largest customers FY2024 12% + 11% = 23%; Korea 1,521 / 1,160 - 1 = 31%; Semiconductor Systems 20,798 / 11,367 = 1.83 times (FY2020-FY2025); Display 1,060 / 1,607 - 1 = -34%; net income 6,998 / 1,377 = 5.1 times and EPS 8.66 / 1.12 = 7.7 times (FY2015-FY2025); revenue 28,368 / 9,659 = 2.9 times; balance sheet build July 2026 6,564 + 7,691 + 5,606 = 19,861; Display revenue excluded from Corporate and Other FY2025 1,185 - 1,060 = 125. Revenue FY2024 27,176 / 26,517 - 1 = 2.5%; R&D Q4 917 / 858 - 1 = 6.9%; revenue 30,837 / 25,785 - 1 = 19.6% (FY2022 to trailing July 2026); strategic investment gains 755 + 949 = 1,704; China less Taiwan nine months 6,688 - 5,902 = 786; forward earnings implied 40.91 / 26.95 = 1.52 times trailing; Q4 guide 10,250 / 9,115 - 1 = 12.5% above Q3. Memory share of systems revenue: DRAM plus flash 19% + 21% = 40% (FY2021), 17% + 6% = 23% (FY2023), 26% + 7% = 33% (FY2025). Market value 376,360 / 182,232 = 2.07 times the FY2025 year-end value; trailing net income 9,267 / 6,998 - 1 = 32%. Operating income 8,289 / 1,693 = 4.9 times (FY2015-FY2025). P/E gap to Lam 57.7 - 40.9 = 16.8. Q3 FY2026 returns 860 / 3,037 = 28% of operating cash flow. China plus Taiwan nine months (6,688 + 5,902) / 24,037 = 52%. Systems revenue Q1 to Q3 FY2026 7,040 / 5,141 - 1 = 37%. Systems share of segment operating income FY2025 7,379 / (7,379 + 1,792) = 7,379 / 9,171 = 80%. Systems R&D 3,042 / 20,798 = 14.6%. Third quarter share of nine-month systems profit 2,657 / 6,176 = 43%. Services FY2024 6,225 / 5,732 - 1 = 8.6%. Services share of backlog 4,335 / 11,758 = 37% (October 2021). Research per diluted share 1,451 / 1,226 = 1.18 (FY2015) and 3,570 / 808 = 4.42 (FY2025). Net cash plus long-term investments 2,689 + 5,268 = 7,957. Dividends per share 1.78 / 1.22 - 1 = 46%. ROE 35.5% / 10% = 3.5 times - segment shares, margins and growth - segment and company margins, research and tax. — FY2015-FY2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Applied Materials' Forms 10-K and 10-Q, results releases and market data; operands shown in the source line.
Sources
Generated September 25, 2026