Quick verdict: AMAT vs ARM in 2026

Overall, Applied Materials (AMAT) appears to have a more compelling financial profile across several key metrics as of March 31, 2026, leading on 7 out of 11 comparable metrics. While Arm Holdings (ARM) is the clear growth leader with superior revenue expansion, AMAT holds the edge in profitability, offering a more attractive valuation and stronger free cash flow generation. Analysts also show a slight preference for AMAT, projecting greater upside potential. This is not investment advice.

AMAT vs ARM: key metrics side by side

Full side-by-side comparison of AMAT and ARM across valuation, profitability, growth and analyst sentiment. Data updated 2026-03-31.

AMAT vs ARM valuation comparison

When comparing AMAT vs ARM valuation, a clear distinction emerges based on traditional metrics as of 2026-03-31. Applied Materials (AMAT) presents a significantly more appealing profile for value-oriented investors, with a trailing twelve-month (TTM) Price-to-Earnings (P/E) ratio of 32.69x. This stands in stark contrast to Arm Holdings (ARM), which trades at a lofty P/E of 181.59x, indicating a much higher premium placed on its future earnings potential by the market. Similarly, AMAT’s Price-to-Book (P/B) ratio of 11.8x is considerably lower than ARM’s 18.65x, further reinforcing AMAT’s position as the relatively cheaper stock from a multiples perspective.

Despite AMAT’s more favorable P/E and P/B ratios, a deeper look at the Discounted Cash Flow (DCF) models suggests both companies are currently valued at a premium to their intrinsic worth, based on these models. AMAT shows a DCF upside of -216.8%, while ARM’s DCF indicates a -95.0% upside. While both figures suggest overvaluation, ARM’s negative DCF upside is less severe, implying its current price is closer to its estimated intrinsic value according to this specific model, relative to AMAT. However, for investors primarily focused on current earnings and asset valuations, the AMAT vs ARM valuation clearly positions AMAT as the more conservatively priced option in the competitive technology sector.

AMAT vs ARM growth comparison

In terms of growth, Arm Holdings (ARM) exhibits substantially stronger momentum, making it the clear leader in the AMAT vs ARM growth comparison. ARM reported an impressive year-over-year revenue growth of +23.9%, highlighting its robust expansion in the semiconductor intellectual property market. This growth rate significantly outpaces Applied Materials (AMAT), which posted a more modest revenue growth of +4.4% over the same period. ARM’s higher growth trajectory suggests a company in a more aggressive expansion phase, capitalizing on increasing demand for its chip designs, particularly in emerging technologies such as AI and IoT, driving its strong forward estimates.

While ARM demonstrates superior revenue growth, it’s essential to consider this in conjunction with profitability metrics. Despite its high top-line expansion, ARM’s net margin of 17.15% and EBITDA margin of 22.41% are notably lower than AMAT’s, which are 27.78% and 35.04% respectively. This suggests that while ARM is growing faster, AMAT is currently more efficient at converting revenue into profit. For investors prioritizing top-line expansion and market penetration, ARM’s strong growth figures present a compelling narrative, but it comes with a premium valuation that factors in these high forward estimates for future earnings growth. Understanding this balance is crucial when evaluating the amat vs arm earnings growth comparison for long-term investment strategies.

AMAT vs ARM profitability

The AMAT vs ARM profitability comparison reveals Applied Materials as the more efficient and financially robust enterprise based on current metrics. AMAT boasts a strong net margin of 27.78% and an EBITDA margin of 35.04%. These figures indicate that AMAT is highly effective at managing its operational costs and retaining a significant portion of its revenue as profit. This robust profitability is a testament to its mature business model in the semiconductor equipment industry, where it holds a dominant position and benefits from strong customer relationships and economies of scale, allowing it to generate significant earnings.

In contrast, Arm Holdings (ARM) reported a net margin of 17.15% and an EBITDA margin of 22.41%. While these are respectable margins, especially for a company experiencing rapid growth, they fall short of AMAT’s impressive figures. Both companies report “N/A%” for Return on Equity (ROE), preventing a direct comparison on this specific metric. However, when considering Free Cash Flow (FCF) yield, AMAT once again leads with 2.42%, significantly higher than ARM’s 0.67%. This indicates that AMAT generates substantially more cash relative to its market capitalization, providing greater financial flexibility for investments, share buybacks, or dividend payments. Therefore, for investors focused on strong cash generation and superior profitability, AMAT generates more cash and is the preferred choice in the amat vs arm profitability comparison.

Analyst ratings: AMAT vs ARM

When examining the analyst ratings for AMAT vs ARM, both companies receive a consensus “Buy” rating, reflecting general optimism in the semiconductor sector as of March 31, 2026. However, there’s a nuanced preference that emerges in favor of Applied Materials. AMAT has a higher percentage of “Buy” ratings from analysts, with 79.3% of the 53 analysts covering the stock recommending a buy. Their consensus price target for AMAT is $420.83, implying a significant upside of +30.2% from its current price of $323.12. This suggests that analysts see substantial room for AMAT’s stock to appreciate, likely driven by its strong market position and solid fundamentals.

Arm Holdings, while also positively viewed, trails AMAT in analyst conviction and perceived upside. Of the 27 analysts covering ARM, 77.8% recommend a “Buy” — a respectable figure but slightly lower than AMAT’s. The consensus price target for ARM is $156.25, which offers a +14.1% upside from its current price of $136.96. While still positive, this target upside is less than half of what analysts project for AMAT. This difference suggests that while analysts are bullish on both, they anticipate greater returns from AMAT over the next 12 months. This makes AMAT the stronger analyst favorite for higher potential returns, an important factor for those considering amat vs arm analyst ratings and recommendations, as well as the amat vs arm target price comparison 2026.

Should I buy AMAT or ARM stock in 2026?

Deciding whether to buy AMAT or ARM stock in 2026 depends heavily on an investor’s individual strategy and risk tolerance, with each offering distinct advantages. For growth-oriented investors, Arm Holdings (ARM) presents a compelling case. Its impressive revenue growth of +23.9% year-over-year positions it as a leader in innovation and market expansion within the critical chip design segment. ARM’s relatively low debt-to-equity ratio of 0.11x also offers financial flexibility for continued investment. However, this growth comes at a premium, as evidenced by its high P/E ratio of 181.59x and P/B ratio of 18.65x. Investors looking for a company with stronger momentum and significant potential for market share gains, willing to accept a higher valuation, might find ARM more appealing, especially given its strategic importance across a vast array of computing devices, directly addressing the amat vs arm stock comparison 2026 for growth investors.

Conversely, for value investors or those prioritizing strong fundamentals and profitability at a more reasonable price, Applied Materials (AMAT) appears to be the more attractive option in the amat vs arm fundamentals and valuation comparison. AMAT trades at a much more conservative P/E ratio of 32.69x and a P/B ratio of 11.8x, offering better value compared to ARM’s elevated multiples. Furthermore, AMAT demonstrates superior profitability with a net margin of 27.78% and an EBITDA margin of 35.04%, alongside a healthier Free Cash Flow yield of 2.42%. These metrics suggest a financially robust company capable of generating substantial profits and cash flow from its operations, making it a potentially safer and more stable investment within the semiconductor manufacturing equipment sector.

For income-focused investors, the choice is clear, albeit with a minor distinction. AMAT offers a token dividend yield of 0.01%, indicating a commitment, however small, to returning capital to shareholders. ARM, on the other hand, currently offers no dividend (0%). Therefore, for any investor seeking even a minimal income stream, AMAT is the only option between the two. Ultimately, the question “should i buy amat or arm stock 2026” comes down to whether you prioritize high-growth potential at a premium (ARM) or strong profitability, value, and stability with some dividend potential (AMAT). This is not investment advice; always conduct your own thorough research when considering which is a better investment, AMAT or ARM.

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FAQ: AMAT vs ARM