Should You Buy, Sell or Hold AMAT Stock After a 31% Rise in 3 Months?

Applied Materials AMAT shares have climbed 31% in the past three months, outperforming the Zacks Computer and Technology sector and the Zacks Electronics - Semiconductors industry. While the broader sector has appreciated 3.6% in the past three months, the Zacks Electronics - Semiconductors industry has declined 1%.

AMAT 3-Month Performance Chart

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The rise in the stock price has made AMAT stock trade at a premium. Currently, AMAT has a price-to-sales (P/S) multiple of 10.29X, which is much above the industry’s P/S of 5.36X. AMAT’s value score of F also suggests its overvaluation.

AMAT Forward 12-Month (P/S) Valuation Chart

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Given the rise in share price and valuation combination, investors might ask: Should they buy, sell or hold the stock? Let’s discuss the fundamentals in detail.

AMAT Gains From Rising Demand for AI Infrastructure

Applied Materials continues to benefit from its broad portfolio of semiconductor manufacturing solutions spanning deposition, materials engineering, etch, metrology, inspection, packaging and process integration. This breadth is becoming increasingly valuable as AI-driven semiconductor manufacturing requires customers to improve technology performance while simultaneously increasing wafer output and yields.

In the third quarter of fiscal 2026, Applied Materials’ Semiconductor Systems segment generated a record $7.04 billion of revenues, up 27% year over year, while Applied Global Services (AGS) revenues increased 22% to a record $1.78 billion. Revenue composition highlights the continued concentration of semiconductor investment in AI-related technologies. Foundry, logic and other applications accounted for 67% of Semiconductor Systems revenues, while DRAM contributed 26% and flash memory 7%.

AMAT expects leading-edge foundry-logic, DRAM and advanced packaging to collectively account for around 80% of wafer fabrication equipment growth in 2026 and 2027.

Applied Materials is seeing particularly strong momentum in advanced packaging and HBM-related technologies. The company now expects overall packaging revenues to grow more than 70% in 2026.

AMAT’s portfolio is extending beyond front-end wafer processing into the capacity race at semiconductor fabs. More than 37,000 chambers in the field are connected to the company’s AIx software, which provides AI-powered monitoring, diagnostics and predictive analytics. Applied Materials expects AGS revenues to grow more than 20% in 2026, while its process diagnostics and control business is expected to grow more than 50%.

AMAT’s Broad Portfolio Helps it Challenge its Competitors

AMAT’s broad portfolio positions the company to capture a larger share of customer spending as semiconductor manufacturing becomes increasingly materials-intensive while also keeping its competitors like KLA Corporation KLAC, Lam Research LRCX and Camtek CAMT at bay. The breadth of Applied Materials' portfolio also reduces its dependence on any single semiconductor technology cycle and supports stronger pricing power.

KLA Corporation remains a dominant player in process control, wafer inspection and yield management solutions, while Camtek focuses on semiconductor inspection, metrology, advanced packaging and high-performance computing applications. Lam Research competes with Applied Materials across deposition and etch technologies, including advanced atomic layer deposition systems used in leading-edge semiconductor manufacturing.

All of these companies operate based on large capital expenditures. AMAT is particularly seeing strong customer visibility. Based on longer-term customer demand signals, the company opened its newest manufacturing center in Singapore during the quarter. AMAT is hiring and training manufacturing and customer-support personnel with the objective of doubling quarterly system output from current levels by 2028.

These signals further growth in AMAT’s prospects. For the fourth quarter of fiscal 2026, Applied Materials expects total revenues of approximately $10.25 billion (+/-$500 million), implying 51% year-over-year growth at the midpoint. The company expects non-GAAP earnings of $4.02 per share (+/- 20 cents), indicating 85% year-over-year growth at the midpoint. The Zacks Consensus Estimate for AMAT’s fiscal 2026 earnings is pegged at $12.48, implying year-over-year growth of 32.5%.

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Conclusion: Buy AMAT Stock Now

Despite its sharp rally, AMAT’s broad portfolio, rising AI-driven WFE demand, expanding semiconductor equipment business and investments in manufacturing capacity support further growth. Strong earnings momentum, upward estimate revisions and continued shareholder returns reinforce the bullish case. Therefore, investors should consider buying AMAT stock for long-term growth potential. Given these factors we suggest investors to accumulate this Zacks Rank #2 (Buy) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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