AMAT trades at 41 times FY26 earnings after a 146% run. Growth is real but the price needs flawless 2027 execution. I initiate at sell to $399.
Key points
- $10.25 billion for Q4 FY26 is the company guide for revenue, up from $9.12 billion in Q3 FY26.
- 40.8 times FY26 profit is what the $520.68 price pays for $12.76 of non-GAAP profit per share for FY26.
- 1.36% cash yield for TTM comes from $5.62 billion of free cash flow for the last four quarters against a $413.2 billion value.
The call
The price demands perfection. It needs about $14.90 of profit per share for FY27 at a rich 35 times multiple (price divided by earnings). It also needs revenue near $39.4 billion for FY27 with a 33.8% operating margin for FY27.
Quarterly revenue jumps, then my growth slows ($ billions)- Reported revenue
- Mine, forecast
SEC XBRL facts plus Q4 FY26 company guide and author's FY27E; as of Oct 8, 2026.
Growth will slow after the catch up. I expect digestion of new fab capacity (chip factories), normal pricing, and higher costs to limit FY27. My FY27 has $38.40 billion of revenue for FY27 and $14.26 of profit per share for FY27 at a 33.6% margin for FY27.
What AMAT is worth at different multiples ($ per share)Author arithmetic from $14.26 FY27E EPS; as of Oct 8, 2026.
Valuation
| Item | Figure |
|---|
| FY26 revenue for FY26 | $34.29 billion |
| FY27 revenue for FY27 | $38.40 billion |
| FY27 non-GAAP EPS (profit per share excluding one-offs) for FY27 | $14.26 a share |
| Multiple for FY27 | 28 times |
| Target in 12 months | $399 a share |
A 28 times multiple fits a cyclical equipment leader growing near 12% for FY27. At 35 times the stock needs flawless execution. The downside to $399 is 23.4% from $520.68, so the risk reward favors a sell.
Risks
- AI chip spending pauses and tool orders fall, which you would see in lower systems revenue for two quarters and weaker bookings.
- China sales face new export limits, which you would see in a falling China share from 28% for Q3 FY26 and rising inventory for two quarters.
- Services growth stalls as older tools retire, which you would see in AGS revenue near $1.78 billion for Q3 FY26 with no growth.
What would change my mind
I would turn positive if leading edge orders stay strong enough to lift FY27 revenue above $40 billion for FY27 with margins intact.