On July 29, 2026, Applied Materials Inc AMAT shares fell by 8.4% to a current price of $436.45. This decline comes amid a broader downturn, with the stock experiencing a 52-week range between $154.47 and $739.67.
- GF Value™ verdict: Currently priced at $436.45, AMAT is estimated to be 95.2% overvalued compared to its GF Value™ of $223.56.
- GF Score™: AMAT holds a score of 81/100, indicating a strong overall performance.
- Notable signal: Insiders have sold $169.7 million in shares over the last three months with no buying activity reported.
Is AMAT Overvalued or Undervalued?
The current price of Applied Materials Inc AMAT significantly exceeds its estimated fair value of $223.56 as per GF Value™, suggesting that the stock is overvalued by 95.2%. GF Value™ is GuruFocus' proprietary intrinsic-value estimate that considers historical trading multiples, past business growth, and future performance expectations. This substantial disparity raises concerns about potential risks, as an overvalued stock may face downward price adjustments in the future.
Given the GF Valuation label of “Significantly Overvalued,” investors might need to approach AMAT with caution. The margin of safety is notably absent, indicating that the current price does not provide a buffer against potential declines. This situation calls for a thorough analysis of the underlying business fundamentals and market conditions before making any decisions.
How Does AMAT's Valuation Compare to Its History?
| Metric | Current | Historical |
|---|---|---|
| P/E (TTM) | 41.0x | 20.4x |
| Forward P/E | 25.9x | N/A |
The current P/E ratio of 41.0x is substantially higher than its 5-year median P/E of 20.4x, indicating that AMAT is trading at a premium compared to its historical valuation metrics. This alignment with the GF Value™ verdict reinforces the notion that AMAT is overvalued, as the significant divergence from its historical P/E suggests that the stock may not be justified at its current price level.
What Does AMAT's GF Score™ Tell Us?
The GF Score™ measures the overall quality of a stock based on multiple factors, including financial strength, profitability, growth, valuation, and momentum. AMAT's score of 81/100 reflects strong fundamentals, particularly in financial strength and growth, but its valuation rank is notably low.
| Metric | Rating |
|---|---|
| GF Score™ | 81 |
| Financial Strength | 8/10 |
| Profitability | 10/10 |
| Growth | 10/10 |
| Valuation | 1/10 |
| Momentum | 3/10 |
AMAT's strong profitability and growth ranks, both at 10/10, indicate robust operational performance, but the low valuation rank of 1/10 highlights the significant overvaluation concerns that investors should be wary of. This disparity between strong growth metrics and poor valuation suggests that while the company may be performing well operationally, the market price does not reflect a rational valuation.
What Are Gurus and Insiders Doing with AMAT?
A total of 25 gurus currently hold shares in Applied Materials Inc, with 10 increasing their positions and 12 trimming their holdings in recent quarters. This mixed activity among gurus suggests a divided sentiment regarding the stock's future potential. Notably, insiders have sold $169.7 million worth of shares in the last three months, with no reported buying activity. Such selling might indicate a lack of confidence from those closest to the company regarding its current valuation and future prospects.
The lack of insider buying, in conjunction with significant selling, raises red flags for potential investors. This pattern may suggest that insiders believe the stock is overvalued or that they anticipate challenges ahead, which could influence broader market sentiment.
What This Means for Investors
Considering the significant overvaluation indicated by GF Value™, the elevated P/E ratio compared to historical averages, and the concerning insider activity, it is clear that Applied Materials Inc AMAT is currently overvalued. Investors should proceed with caution, as the risk of a price correction is heightened under these circumstances. For a more comprehensive analysis of AMAT and its financial metrics, you can visit the Applied Materials Inc (AMAT) stock page for additional insights.
Frequently Asked Questions
What is AMAT's GF Score™?
AMAT has a GF Score™ of 81/100, indicating a strong overall performance with particularly high marks in profitability and growth.
Is AMAT overvalued or undervalued?
AMAT is currently considered significantly overvalued, with a GF Value™ estimate of $223.56 versus its current price of $436.45.
What is AMAT's P/E ratio?
AMAT's P/E ratio is 41.0x, which is significantly above its 5-year median P/E of 20.4x, indicating that the stock is trading at a premium compared to its historical valuation.
This stock alert was generated using automated technology and GuruFocus financial data to provide readers with timely and accurate market reporting. This content was reviewed by GuruFocus editorial team prior to publication. Please send any questions or comments about this story to [email protected].
