Shares of semiconductor equipment leader Applied Materials have surged to an all-time high, fueled by relentless artificial intelligence demand and the company’s steadfast commitment to shareholder returns. While facing geopolitical headwinds and a tempered quarterly performance, the firm’s robust annual results continue to garner strong backing from Wall Street.
AI Demand Fuels Record Valuation
Investor confidence is visibly high, as demonstrated by the equity’s recent performance. On December 10, 2025, the stock price closed at a historic peak of $273.63, marking an impressive 60% advance over the preceding twelve-month period. Market observers largely attribute this strength to soaring demand for AI chip fabrication solutions and advanced packaging technologies. The company’s core Semiconductor Systems segment, accounting for 73% of total revenue, is reaping the benefits of substantial customer investments in NAND manufacturing capacity.
Shareholder Returns Remain a Cornerstone
Applied Materials’ board has declared a quarterly cash dividend of $0.46 per share, scheduled for payment on March 12, 2026. This announcement extends the firm’s streak of consecutive annual dividend increases to eight years. A previous hike had already been implemented in March 2025, raising the payout by 15% from $0.40 to $0.46. Over the last decade, the company has grown its dividend at a compound annual rate of 16%.
Beyond dividends, the capital return strategy includes aggressive share repurchases. Throughout fiscal 2025, Applied Materials returned approximately $6.3 billion to shareholders via combined dividends and buybacks. An additional $14 billion remains authorized for future share repurchases.
Fiscal 2025: Record Annual Results Amid Quarterly Softness
The company posted record annual revenue for fiscal 2025, reaching $28.37 billion—a 4% year-over-year increase. Non-GAAP earnings per share climbed 9% to $9.42. The non-GAAP gross margin expanded by 1.2 percentage points to 48.8%, representing its highest level in a quarter-century.
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However, the fourth quarter showed moderation. Revenue declined 3% to $6.80 billion, while non-GAAP EPS fell 6% to $2.17. A primary factor behind this softer performance is U.S. trade restrictions affecting business with China. Revenue from China now constitutes 29% of the total, down significantly from a peak of 45% in Q1 2024. Management anticipates these restrictions will reduce fiscal 2026 revenue by approximately $600 million and has initiated workforce reductions of around 4% in response.
Despite these challenges, executives emphasize their confidence in maintaining market share. They project a business recovery in the second half of calendar year 2026, driven by massive investments in AI data center infrastructure.
Wall Street Maintains Bullish Stance
Sentiment among research analysts remains overwhelmingly positive. Currently, twelve firms rate the shares as a “Buy,” with no “Sell” recommendations on the street. Several institutions have recently revised their price targets upward:
- Keybanc and UBS both set a target of $285. UBS upgraded its rating from “Neutral” to “Buy.”
- TD Cowen raised its target to $315, citing the company’s strong positioning in the DRAM memory market and leading-edge foundry technology.
- Cantor Fitzgerald established a $300 target, while J.P. Morgan’s stands at $260.
The median price target among 23 covering analysts is $250, within a range spanning $190 to $300.
Investors will await the next significant catalyst with the release of Q1 fiscal 2026 results, scheduled for February 13, 2026.
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