When considering an investment in technology stocks, one might juxtapose a semiconductor manufacturer with a supplier of essential chip fabrication equipment. Which entity presents a more promising opportunity: Applied Materials (AMAT -3.44%) or Intel (INTC -3.91%)?
Applied Materials specializes in providing the tools and services that semiconductor manufacturers utilize in the production of chips, concluding its fiscal year at the tail end of October.
Conversely, Intel engages in the design and manufacture of its own processors for both personal computers and data centers, with its fiscal year terminating in December.
These two corporations occupy distinctly different positions within the semiconductor supply ecosystem. Collapse
AMAT & INTC: Performance Comparison
Key Financial Metrics
AMAT – Applied Materials
$448.27
–3.44% (-$15.97)
INTC – Intel
$98.79
–3.91% (-$4.03)
Market Cap
$368B
52wk Range
$203.40 – $739.67
Gross Margin
49.40%
P/E Ratio
40.03
EPS (TTM)
$11.60
Dividend & Yield
$1.98 (0.43%)
Market Cap
$543B
52wk Range
$32.89 – $142.35
Gross Margin
39.05%
P/E Ratio
-48.49
EPS (TTM)
-$2.12
Dividend & Yield
N/A
AMAT – Applied Materials
$448.27
–3.44% (-$15.97)
Market Cap
$368B
52wk Range
$203.40 – $739.67
Gross Margin
49.40%
P/E Ratio
40.03
EPS (TTM)
$11.60
Dividend & Yield
$1.98 (0.43%)
INTC – Intel
$98.79
–3.91% (-$4.03)
Market Cap
$543B
52wk Range
$32.89 – $142.35
Gross Margin
39.05%
P/E Ratio
-48.49
EPS (TTM)
-$2.12
Dividend & Yield
N/A
The Case for Applied Materials
In its latest annual report for the fiscal year concluding on October 26, 2025, Applied Materials proclaims itself as a pioneer in materials engineering solutions indispensable for the creation of nearly all global semiconductors.
This report also reveals a relatively concentrated customer base, wherein two major clients constitute approximately 19% and 15% of total net revenue.
Such concentration inherently introduces risk. In May 2026, Applied unveiled a strategic innovation partnership with Taiwan Semiconductor Manufacturing (TSM -3.32%) at its Silicon Valley EPIC Center, aiming to develop technologies tailored for AI chips.
On October 6, 2026, Applied also announced a collaborative endeavor with Intel, uniting teams at both the EPIC Center and Intel’s R&D facility in Hillsboro, Oregon, to innovate next-generation transistors and advanced packaging. The announcement did not disclose financial specifics.
For fiscal 2025, revenue surged to nearly $28.4 billion, reflecting a 4.4% increase compared to the previous year, with net income approximating $7.0 billion—yielding a net margin of around 24.7%, down from 26.4% in fiscal 2024, primarily due to tax implications.
Pretax income exhibited an impressive rise of approximately 14%, yet the income tax provision escalated over twofold to $2.3 billion.
This surge was attributed to a $659 million impact from the remeasurement of deferred tax assets in Singapore, alongside a $407 million valuation allowance on corporate alternative minimum tax credits.
The most recent quarter appears robust relative to annual statistics. In the July 26, 2026 quarter, which Applied reported on August 13, revenues increased by 25% to reach $9.1 billion while net income rose by 43% to $2.5 billion.
The company returned $860 million to its shareholders during this quarter, comprising $440 million in share repurchases alongside $420 million disbursed in dividends.
For the forthcoming fiscal fourth quarter, management anticipates revenue of $10.25 billion, with a potential variability of $500 million.
As per its balance sheet dated July 26, 2026, the debt-to-equity ratio, derived from total liabilities, was approximately 0.3x, reflecting total liabilities of $6.5 billion against shareholders’ equity of $25.6 billion.
This ratio juxtaposes total liabilities against equity, revealing the extent of debt employed in asset financing. Additionally, the current ratio—indicating the capability to fulfill short-term obligations with readily convertible assets—stood at roughly 2.4x on the aforementioned date.
For fiscal 2025, Applied Materials generated nearly $5.7 billion in free cash flow; this figure corresponds to $8.0 billion in operational cash flow minus $2.3 billion allocated for capital expenditures.
Free cash flow signifies the cash available to a company after accounting for expenditures necessary for the maintenance or expansion of physical assets.
The Case for Intel
Intel articulates its role as an integrated device manufacturer in its annual report, emphasizing its capacity to design and predominantly manufacture its own chips within its facilities.
The corporation is also striving to elevate Intel Foundry, which fabricates chips for external clients. In the second quarter of 2026, Intel Foundry reported revenues of $5.8 billion—a 31% increase—yet simultaneously incurred an operating loss of $2.1 billion.
In August 2025, the U.S. government committed to purchasing 433.3 million shares of Intel at a price of $20.47 each, which represents a 9.9% stake costing $8.9 billion, in addition to a five-year warrant for acquiring an extra 5% stake, to be exercised only should Intel’s ownership of its foundry business fall below 51%. Intel has stated that the government’s ownership is passive, devoid of board representation.
For the fiscal year 2025 concluding on December 27, 2025, total revenue stood at approximately $52.9 billion—a decrease of nearly 0.5% compared to the preceding year. Intel reported a net loss attributable to the company amounting to $267 million, equating to a net margin of about -0.5%.
This minor loss was mitigated by interest and other income of $3.3 billion, which offset a $2.2 billion operating loss, including a $5.3 billion gain from divestitures, notably the sale of Altera.
The firm remains resolute in its pursuit of profitability while navigating its extensive manufacturing landscape.
The second quarter of 2026, concluding on June 27, presented a starkly different picture. Revenue surged by 25% to reach $16.1 billion, operational income amounted to $1.8 billion, and Intel’s non-GAAP earnings per share registered at $0.42.
Nevertheless, Intel reported a GAAP net loss attributable to the company of $11.0 billion, translating to $2.16 per share.
This loss stemmed from a $12.5 billion noncash charge associated with fluctuations in the fair value of shares held in escrow due to the government agreement rather than operational deficiencies.
For the third quarter, Intel guided a revenue forecast between $15.8 billion and $16.8 billion, coupled with projected non-GAAP earnings per share of $0.38.
As per the June 27, 2026 financials, Intel’s debt-to-equity ratio—derived from total liabilities of $50.5 billion against stockholder equity of $87.5 billion—stood at about 0.6x, while its current ratio approximated 1.6x. By the end of 2025, these metrics were approximately 0.4x and 2.0x, respectively.
Equity experienced a decline during the first half of 2026, partially owing to $13.6 billion in escrowed share losses.
In April, Intel reacquired Apollo’s 49% stake in its Ireland fabrication joint venture for $14.2 billion in cash, a transaction that Intel stated would be funded through existing cash reserves and around $6.5 billion in new debt.
According to calculations, Intel’s 2025 operational cash flow of $9.7 billion fell short of the $14.6 billion expended on property, plant, and equipment, culminating in a negative free cash flow of approximately $4.9 billion on that basis.
Intel’s own non-GAAP adjusted free cash flow—which accounts for government incentives and partner contributions—was reported as negative $1.6 billion. Notably, stock-based compensation added back into the cash flow statement amounted to $2.4 billion, or roughly 25.1% of operational cash flow.
Risk Profile Comparison
Applied Materials operates within an industry characterized by cyclical patterns and historical volatility concerning customer demand, as noted in its annual report.
In the July 2026 quarter, China accounted for 28% of its revenue—down from 35% a year prior—indicating that U.S. export restrictions and trade policies remain significant risks.
In February 2026, Applied agreed to a payment of $252.5 million to the U.S. Department of Commerce to settle allegations regarding the unauthorized reexportation of chipmaking equipment to Semiconductor Manufacturing International (SMIC) in China between November 2020 and July 2022, as detailed in settlement documents from the Bureau of Industry and Security.
The Justice Department and the SEC concluded their associated investigations without pursuing further action.
As part of the settlement, Applied committed to executing two annual audits of its export compliance program for the years 2026 and 2027.
Moreover, the annual report underscores potential risks associated with cybersecurity incidents and future impairment charges related to goodwill or intangible assets.
Intel’s strategic turnaround hinges on the performance of its foundry business, which has yet to achieve profitability, despite revenue growth.
Its annual report asserts that leading-edge manufacturing demands substantial capital investments and necessitates production volumes that surpass anticipated demand for Intel’s proprietary products. Additionally, existing shareholders have seen their ownership diluted.
In August 2026, Intel issued approximately 242.1 million new shares at $95 each, generating around $23 billion, inclusive of the exercised underwriters’ option; prior to this, in September 2025, Nvidia (NVDA -3.02%) agreed to inject $5 billion into Intel stock at a price of $23.28 per share.
The government’s warrants permit up to 241 million additional shares at $20 each but are exercisable solely if Intel relinquishes control of at least 51% of its foundry business.
A derivative lawsuit has also been lodged by a shareholder against Intel’s directors, the Department of Commerce, and Commerce Secretary Howard Lutnick in March 2026.
It alleges breaches of fiduciary duty regarding the approval of the August 2025 government agreement and seeks to nullify the arrangement.
This lawsuit transitioned to federal court in April, with defendants submitting motions to dismiss in May, and as of Intel’s July 2026 quarterly report, the case was still pending.
Valuation Comparison
Applied Materials boasts a superior profit margin, whereas Intel is valued at a lower price-to-sales ratio and showcases a heightened forward price-to-earnings ratio.
| Metric | Applied Materials | Intel |
|---|---|---|
| Forward P/E | 42.2x | 77.7x |
| P/S ratio | 13.9x | 10.6x |
Valuation metrics are sourced from Financial Modeling Prep (FMP) and may vary from those offered by alternative data providers.
The Forward P/E ratio juxtaposes current stock prices against anticipated future earnings, while the P/S ratio reflects market value relative to sales over the prior twelve months.
Which Stock Would I Buy in 2026?
While Applied Materials emerges as the more appealing acquisition in my view, a prudent approach would be to gradually accumulate shares instead of making a singular substantial purchase.
The firm supplies the necessary equipment for chip manufacturers as they scale operations, and its latest quarterly results showcased a commendable 25% revenue growth.
Management has projected an increase in revenue expectations for its chip equipment segment for the calendar year 2026.
Furthermore, the company consistently transforms a significant portion of its sales into profits and rewards its shareholders with cash returns.
Nevertheless, potential investors should bear in mind that the chip equipment sector is inherently cyclical.
Applied’s annual report articulates the cyclical tendencies of its industry, and with China contributing just over a quarter of recent revenues, the implications of export controls and the Commerce Department settlement loom large.
The stock can also exhibit volatility, thus a staggered purchase strategy seems prudent.
Intel poses a more complex scenario. The reported second-quarter loss of approximately $11 billion primarily resulted from a noncash accounting adjustment, which should not be interpreted as indicative of a business collapse.
However, the foundry segment remains unprofitable while capital expenditures are significant. The decision to launch $23 billion in new stock in August has also led to the dilution of current shareholders’ equities.
Intel’s stock currently trades well above the price at which the U.S. government acquired its stake. Should the foundry division begin generating profits, Intel will warrant renewed evaluation.
Both of these equities are best held as part of a diversified portfolio encompassing at least 50 companies intended for long-term ownership.
Source link: Fool.com.
