...

Applied Materials, Inc. (AMAT) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

Popular:

Applied Materials, Inc. (AMAT)

View Full Profile →

Intrinsic Value (DCF)

Current$319.08
→
Intrinsic$201.08
-37%
$134.95$201.08$332.58
Market implies 29% growth for 5 years
Current price reflects execution expectations above 17% growth — not unreasonable for quality businesses.
At $319, the market prices in continued strong cash flow growth (29%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $135 → Bull $333. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →13%15%17%19%
8%$251$272$295$320
10%$172$186$201$217
12%$130$140$151$163
14%$104$112$121$130

Bull Case

  • Bull case ($333) offers 4% upside at 21% growth, 8% discount

Bear Case

  • Bear case ($135) implies 58% downside at 14% growth, 12% discount
  • Price reflects 29% growth expectations vs 17% historical — high bar to clear
  • Trading 37% above base case — execution must exceed assumptions to justify
Loading charts...

5-Year Free Cash Flow Projection

Year 1$6.68B
Year 2$7.82B
Year 3$9.17B
Year 4$10.74B
Year 5$12.59B
Terminal$199.47B

📐 Model Inputs

Growth Rate17.2%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$5.70BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

Related Analysis

Full Stock ProfileCompare AMAT vs AAPLStock Screener

Frequently Asked Questions

Is AMAT stock undervalued or overvalued?
🔴 OVERVALUED

AMAT trades at $319.08 vs. our DCF-derived intrinsic value of $184.57, implying -38% downside. Using a 9.5% WACC and 17.2% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($273.39) suggests limited upside.

What is AMAT's intrinsic value?

Using a 5-year DCF model: Base FCF of $5.70B, projected at 17.2% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-686M net debt and dividing by 0.81B shares: Bear $123.97 | Base $184.57 | Bull $273.39. Current price $319.08 implies -38% to base case.

How is AMAT's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 17.2% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($148.44B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 26.1x.