Quick verdict: AMAT vs ARM in 2026

Applied Materials (AMAT) appears to hold an overall edge in this 2026 comparison, demonstrating stronger profitability and a more attractive valuation for investors seeking robust fundamentals. While Arm Holdings (ARM) shines as the clear growth leader with its impressive revenue momentum, AMAT takes the lead in value, margins, and analyst sentiment, offering the most significant price target upside according to current consensus. 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 2026-04-30.

AMAT vs ARM valuation comparison

When considering AMAT vs ARM valuation, Applied Materials presents a significantly more appealing profile for value-oriented investors as of April 30, 2026. AMAT trades at a P/E ratio of 38.7x, which is considerably lower than ARM’s astronomical 267.41x. This stark difference suggests that AMAT’s earnings are valued much more reasonably by the market compared to ARM, which commands a premium often associated with high-growth expectations. Similarly, AMAT’s Price-to-Book (P/B) ratio of 13.97x is less than half of ARM’s 27.47x, further solidifying AMAT’s position as the cheaper option on a book value basis.

The Discounted Cash Flow (DCF) models, while indicating overvaluation for both companies, show a less severe implied downside for ARM. AMAT has a DCF upside of -196.4%, suggesting its current price is significantly above its intrinsic value according to this specific model. In contrast, ARM’s DCF upside is -96.0%, which, while still implying significant overvaluation, is “less negative” than AMAT’s, suggesting it’s closer to fair value from this perspective. However, traditional valuation multiples like P/E and P/B strongly favor AMAT, making it appear substantially cheaper relative to its current earnings and assets, thus giving AMAT the definitive edge in our AMAT vs ARM valuation analysis.

AMAT vs ARM growth comparison

In the AMAT vs ARM growth comparison, Arm Holdings plc clearly demonstrates stronger recent revenue momentum. ARM reported a robust year-over-year revenue growth of 23.9%, significantly outpacing Applied Materials’ 4.4% growth. This higher growth rate for ARM reflects its pivotal role in the expanding semiconductor and computing architecture markets, particularly given its licensing model that benefits from increasing chip design complexity and adoption across various devices. Its asset-light business model contributes to its ability to scale revenues rapidly as the demand for its core intellectual property intensifies.

While ARM exhibits superior top-line expansion, AMAT’s growth, though more modest, is underpinned by its position as a critical supplier of manufacturing equipment to the semiconductor industry. AMAT’s revenue of $28.37 billion dwarfs ARM’s $4.01 billion, indicating a much larger and more mature operational scale. AMAT’s growth trajectory is inherently tied to the capital expenditure cycles of chipmakers, which can be cyclical. Despite ARM’s faster revenue growth, AMAT boasts superior profitability margins, including a net margin of 27.78% and an EBITDA margin of 35.04%, compared to ARM’s 17.15% net margin and 22.41% EBITDA margin. This suggests that while ARM is growing faster, AMAT is currently more efficient at converting its revenue into profit, giving it a stronger fundamental base even with slower revenue growth.

AMAT vs ARM profitability

When analyzing AMAT vs ARM profitability, Applied Materials (AMAT) stands out with demonstrably higher margins and more efficient cash generation. AMAT achieved a strong net margin of 27.78%, meaning it converts a significantly larger portion of its revenue into net income compared to ARM, which recorded a net margin of 17.15%. This superior net margin is a key indicator of AMAT’s operational efficiency and pricing power within its segment of the semiconductor industry, despite ARM’s software-like licensing model typically associated with high margins. Furthermore, AMAT’s EBITDA margin of 35.04% also comfortably surpasses ARM’s 22.41%, indicating better profitability before interest, taxes, depreciation, and amortization.

In terms of cash generation, AMAT also shows a stronger performance with a Free Cash Flow (FCF) yield of 2.04%, which is more than four times higher than ARM’s FCF yield of 0.45%. This suggests that AMAT is more effective at generating cash from its operations relative to its market capitalization, which can be reinvested into the business, used for share buybacks, or returned to shareholders. Although Return on Equity (ROE) data is not available for either company, the existing profitability metrics heavily favor Applied Materials, indicating it is currently the more profitable and cash-generative enterprise.

Analyst ratings: AMAT vs ARM

The analyst consensus provides a clear preference in the AMAT vs ARM comparison, favoring Applied Materials in terms of potential upside. AMAT currently holds a “Buy” consensus rating from 53 analysts, with a substantial 79.3% of these analysts recommending a “Buy.” The collective target price for AMAT is $426.39, representing an attractive upside potential of +11.4% from its current price of $382.59. This strong positive outlook indicates that market professionals anticipate continued appreciation for AMAT stock, driven by its solid fundamentals and integral role in semiconductor manufacturing.

Conversely, while Arm Holdings also garners a “Buy” consensus from the 27 analysts covering it (74.1% buy ratings), the analyst target price paints a different picture regarding short-term upside. The consensus target for ARM is $163.75, which suggests a significant downside of -18.8% from its current price of $201.69. This discrepancy between a “Buy” rating and a negative price target implies that while analysts may see long-term potential in ARM’s technology and market position, they view its current valuation as stretched, suggesting the stock may be overbought at present levels. Therefore, based on analyst ratings and target prices, AMAT is the preferred stock for immediate upside potential.

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 strategy and risk tolerance. For growth-oriented investors primarily focused on companies with strong revenue expansion and market disruption potential, ARM might be the more appealing choice. Its impressive 23.9% year-over-year revenue growth indicates significant momentum in the crucial semiconductor IP licensing space, positioning it to capitalize on the increasing demand for advanced chip designs. However, this growth comes at a steep price, reflected in its very high P/E ratio of 267.41x and P/B of 27.47x, indicating that much of its future growth is already priced into the stock.

For value investors seeking a more reasonably priced entry point with solid profitability, Applied Materials (AMAT) presents a compelling alternative. AMAT’s significantly lower P/E ratio of 38.7x and P/B of 13.97x suggest it offers a more attractive valuation compared to ARM. Furthermore, AMAT’s robust net margin of 27.78% and EBITDA margin of 35.04%, coupled with a healthy FCF yield of 2.04%, underscore its financial strength and efficient operations. Analysts also see an 11.4% upside for AMAT, contrasting with a projected -18.8% downside for ARM, suggesting AMAT may offer a better risk-reward profile for those focusing on fundamentals and near-term price appreciation.

Regarding income generation, neither AMAT nor ARM is suitable for investors primarily seeking dividends, as both companies currently have a 0.0% dividend yield. Both are growth-focused technology companies that reinvest their earnings back into the business. Ultimately, investors should weigh ARM’s high-growth potential against its premium valuation, versus AMAT’s more balanced profile of solid profitability, reasonable valuation, and positive analyst sentiment. This is not investment advice; always conduct your own thorough research.

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