Applied Materials Is Now More Expensive Than Its Dot-Com Era Peak. AI Demand Justifies the AMAT Stock Valuation. Applied Materials Inc_ campus sign-by Sundry Photography via iStock Ebube Jones Sat, June 20, 2026 at 9:00 AM PDT 5 min read AMAT Applied Materials (AMAT) is forcing investors to revisit a familiar question from tech history. The company now trades at a valuation above its late 1990s peak, when internet enthusiasm drove many technology stocks to unsustainable levels before the Dot Com bubble finally burst. This time, though, the setup is more grounded in real demand. Their Chief Executive Officer, Gary Dickerson, says Artificial Intelligence (AI) is fueling a multi-year expansion in chip manufacturing, and the broader semiconductor market is moving in the same direction. More News from Barchart Our exclusive Barchart Brief newsletter is your FREE midday guide to what's moving stocks, sectors, and investor sentiment - delivered right when you need the info most. Subscribe today! Industry forecasts now point to global semiconductor revenue surpassing $1 trillion in 2026, helped by strong growth in memory and logic chips as AI spending accelerates. That helps explain the reason that investors are willing to pay such a rich premium for AMAT today. Still, the setup raises an obvious but uncomfortable question. Has the market once again pushed a powerful story to a price that leaves little room for disappointment, or does Applied Materials truly deserve to trade above its dot-com era high? Applied Materials Stretched Valuation Based in Santa Clara, California, Applied Materials is a semiconductor equipment company that designs and sells tools, services, and software used to make chips, displays, and other electronics across steps like deposition, etch, inspection, and advanced packaging. Their stock has a year-to-date (YTD) gain of 144% and a 52-week jump of 262.76%. www.barchart.com The market is clearly paying up for that performance. The shares now trade at 59.95 times price-to-earnings Non-GAAP (TTM) and 16.25 times sales (TTM), while the sector’s median sits at 25.16 times earnings and 3.63 times sales. This rich multiple is not coming out of nowhere. Applied Materials reported results for the quarter ended April 26, that help explain why investors are comfortable with a higher price than in past cycles. Their non-GAAP earnings per share came in at $2.86, beating the $2.68 consensus and delivering a 6.72% upside surprise. The same quarter delivered record revenue of $7.91 billion. GAAP gross margin was 49.9%, and operating income reached $2.52 billion, or 31.9% of sales, which is well above what the company produced during the original internet boom. There was also a record non-GAAP gross margin of 50.0% and non-GAAP operating income of $2.54 billion, or 32.1% of revenue. The company generated $845 million in cash from operations in that quarter. It returned $765 million to shareholders through $400 million of buybacks and $365 million in dividends. That capital return sits inside a bigger cash flow picture. Their operating cash flow for the April 2026 period totaled $2.53 billion, up 50.12% year-over-year (YOY),...
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