Applied Materials, Inc.

AGS, which generated ~$6.4B in FY2025 with over two-thirds from recurring subscriptions, average 2.8-year terms, and renewal rates above 90%, provides meaningful forward visibility. Semiconductor Systems, however, remains tied to chipmaker capital expenditure cycles with no disclosed backlog exceeding two times annual revenue.

AMAT offers a broad portfolio across process steps — CVD, PVD, ALD, CMP, and etch — spanning memory and logic customers across multiple chipmakers. However, Semiconductor Systems constituted roughly 73% of FY2024 revenue and all product lines move in the same semiconductor capital expenditure cycle, limiting true diversification.

No single country exceeded 40% of FY2025 revenue (China 30%, Taiwan 24%, Korea 20%, US 14%), but the Asia-Pacific region collectively represented approximately 86% of net revenue. Meaningful revenue outside Asia remains limited, concentrating exposure to geopolitically and cyclically correlated chipmaking hubs.

Non-GAAP gross margins held near ~49% across FY2022-FY2025 as revenue grew from $25.8B to $28.4B, demonstrating moderate operating leverage in a capital-intensive equipment business. The business lacks the incremental-margin profile of software platforms but scales better than pure-commodity manufacturers.

Semiconductor Systems equipment is mission-critical to fab operations — no chipmaker can transition to a new node without qualified deposition and etch tools — providing durable demand even when spending is lumpy. AGS, which is transitioning to fully recurring revenue in FY2026, adds a structural layer of contractually anchored cash flow to the predominantly transactional equipment base.