Applied Materials Inc. (NASDAQ:AMAT)

The analysis of the annual financial data reveals several notable trends regarding the asset base and equity position over the six-year period.

Total Assets

Reported total assets have exhibited a consistent upward trajectory throughout the observed period, increasing from $22,353 million in 2020 to $36,299 million in 2025. This reflects a growth of approximately 62%. Adjusted total assets, which likely exclude goodwill or intangible asset adjustments, follow a similar growth pattern, rising from $18,887 million to $32,592 million over the same timeframe, indicating an increase of approximately 72%. The growth of adjusted assets slightly outpaces that of reported assets, suggesting that asset quality or valuation adjustments may have become more conservative over time or that goodwill accounts for a significant portion of the asset base growth.

Stockholders’ Equity

Reported stockholders’ equity has also shown notable growth, rising from $10,578 million in 2020 to $20,415 million in 2025, nearly doubling over the period. This increase suggests strengthening capital base and possibly retained earnings accumulation or equity issuance. Adjusted stockholders’ equity, which appears to eliminate goodwill or related intangibles, increased from $7,112 million to $16,708 million in the same timeframe, representing more than a twofold increase. The adjusted equity growth rate surpasses that of reported equity, which may indicate that goodwill or intangible asset valuations dampen the reported equity figures to some extent, or that adjustments in accounting policies have had an amplifying effect on equity figures when goodwill is excluded.

Relationship Between Adjusted and Reported Figures

The differences between reported and adjusted figures are significant, especially in the equity section where adjusted equity values are considerably lower than reported values. However, both metrics trend upward consistently, reflecting overall growth. The persistent gap indicates that intangible assets such as goodwill form a substantial part of the company's reported asset and equity base. The respective increases in both reported and adjusted numbers imply robust expansion irrespective of the adjustment for goodwill.

Insight Summary

The company demonstrates steady growth in total assets and stockholders’ equity, both on a reported and adjusted basis. The increase in adjusted figures at a faster rate than reported figures suggests either increasing asset quality or a strategy of reducing goodwill-related balance sheet items. The strengthening equity position signals improved financial stability and capacity for further investment or debt absorption. Overall, the trends indicate a financially expanding entity with growing shareholder value and asset base over the six-year horizon.

Total Asset Turnover

The reported total asset turnover showed an overall upward trend from 0.77 in 2020 to a peak of 0.96 in 2022, followed by a decline to 0.78 in 2025. The adjusted total asset turnover, which excludes goodwill, displayed a similar pattern but at consistently higher levels, increasing from 0.91 in 2020 to 1.12 in 2022, then decreasing to 0.87 in 2025. This indicates that operational efficiency in using assets to generate revenue improved until 2022 before moderating in the subsequent years.

Financial Leverage

Reported financial leverage remained relatively stable around 2.11 to 2.19 from 2020 to 2022, then declined steadily from 1.88 in 2023 to 1.78 by 2025. Adjusted financial leverage followed a parallel trend but at higher values, starting at 2.66 in 2020, peaking at 2.71 in 2022, and decreasing to 1.95 by 2025. The decline in leverage suggests a reduction in reliance on debt or an increase in equity financing over time, particularly from 2023 onward.

Return on Equity (ROE)

Reported ROE significantly increased from 34.21% in 2020 to a high of 53.51% in 2022, then decreased to 34.28% in 2025. Adjusted ROE, reflecting a goodwill exclusion, was consistently higher and followed the same trend, rising from 50.89% to 76.82% before falling to 41.88%. This pattern implies that profitability from shareholders' perspective improved strongly until 2022 but faced pressure afterward, potentially due to reduced asset turnover and leverage.

Return on Assets (ROA)

The reported ROA presented a steady increase from 16.19% in 2020 to 24.41% in 2022, then declined gradually to 19.28% by 2025. Adjusted ROA remained above reported values throughout the period, rising from 19.16% to 28.34% before decreasing to 21.47%. These results indicate that asset profitability strengthened up to 2022, with a moderate decrease in subsequent years, reflecting changes in operational efficiency and asset utilization excluding goodwill.

Total Assets

The reported total assets demonstrate a consistent upward trend over the six-year period, increasing from 22,353 million US dollars in 2020 to 36,299 million US dollars in 2025. Similarly, the adjusted total assets, which presumably exclude goodwill, also exhibit growth, rising from 18,887 million US dollars in 2020 to 32,592 million US dollars in 2025. Both measures indicate ongoing expansion of asset base, although the adjusted total assets remain consistently lower than the reported figures due to the goodwill adjustment.

Total Asset Turnover

The reported total asset turnover ratio shows variability over the years, starting at 0.77 in 2020 and peaking at 0.96 in 2022 before declining to 0.78 in 2025. This pattern suggests an initial improvement in efficiency of asset utilization to generate revenues, followed by a reduction in turnover effectiveness in later years. The adjusted total asset turnover ratio, which accounts for goodwill exclusions, mirrors this trend, commencing higher at 0.91 in 2020, reaching a maximum of 1.12 in 2022, and then decreasing to 0.87 by 2025. The adjusted turnover ratios are consistently higher than the reported ratios, reflecting a more efficient asset use measurement when excluding goodwill.

Insights and Trends

Overall, the company has been increasing its asset base steadily over the analysed period, indicating investment or acquisition growth. However, the decreasing trend in both reported and adjusted asset turnover ratios in the later years suggests diminishing efficiency in converting assets into revenue. This may point to challenges in maintaining operational effectiveness despite asset growth. The difference between reported and adjusted figures highlights the impact of goodwill on asset valuation and efficiency metrics, emphasizing the importance of goodwill adjustments in providing a clearer picture of operational performance.

The financial data over the periods from 2020 to 2025 reveals several notable trends in the company's asset base, equity, and leverage ratios, both on a reported and goodwill-adjusted basis.

Total Assets

Reported total assets show a consistent upward trend, increasing from $22,353 million in 2020 to $36,299 million in 2025. This represents a significant growth of approximately 62% over the five-year period. The adjusted total assets, which exclude goodwill, also exhibit a similar growth trajectory, rising from $18,887 million in 2020 to $32,592 million in 2025, marking a comparable increase. The growth in adjusted assets confirms that the expansion of the asset base is not solely attributable to goodwill but reflects broader asset accumulation.

Stockholders’ Equity

Reported stockholders’ equity grows steadily across the periods, from $10,578 million in 2020 to $20,415 million in 2025, nearly doubling over five years. The adjusted stockholders’ equity, which removes goodwill effects, increases from $7,112 million in 2020 to $16,708 million in 2025. The adjusted equity figures grow at a somewhat faster relative pace, particularly noticeable after 2022, indicating an improvement in underlying net asset value independent of goodwill.

Financial Leverage

The reported financial leverage ratio remains relatively stable from 2020 through 2022, hovering around 2.11 to 2.19, before decreasing to 1.78 by 2025. This decline suggests a gradual reduction in reliance on debt or liabilities relative to equity on a reported basis. Similarly, adjusted financial leverage ratios, which exclude goodwill effects, follow a similar pattern but at higher levels, starting at 2.66 in 2020 and decreasing to 1.95 by 2025. The higher adjusted leverage indicates that goodwill adjustments reduce equity and consequently increase leverage ratios. The downward trend overall signals an improvement in capital structure, with the company moving toward a lower financial risk profile over time.

In summary, the company demonstrates robust growth in both reported and adjusted total assets and stockholders’ equity, signifying expansion and strengthening of its financial position. The gradual decrease in both reported and adjusted financial leverage ratios over the later years points to a deliberate or natural de-risking in its capital structure, improving its equity base relative to debt. Adjusted measures consistently show higher leverage and lower equity, emphasizing the impact of goodwill on the financial statements and underscoring the importance of considering adjusted figures for a clearer view of underlying financial health.

The financial data over the reported periods reflect distinct trends in both reported and goodwill adjusted metrics, highlighting noteworthy changes in equity and profitability ratios.

Equity Analysis

The reported stockholders’ equity demonstrates a generally upward trajectory, increasing steadily from 10,578 million US dollars to 20,415 million US dollars over the examined years. A notable acceleration appears between the years ending in 2022 and 2023, where equity jumps significantly from 12,194 million to 16,349 million US dollars. This growth continues, albeit at a slower pace, reaching 20,415 million by the last date.

In contrast, the adjusted stockholders’ equity—reflecting goodwill adjustments—also grows meaningfully but starts from a lower base of 7,112 million US dollars and attains 16,708 million US dollars by the end of the period. Similar to the reported equity, a pronounced increase is visible between 2022 and 2023, followed by continued growth through to the final date. The adjustment narrows the equity value difference over time, indicating potentially reduced intangible asset impacts or increasing tangible equity.

Return on Equity (ROE) Analysis

The reported ROE percentage shows a fluctuating yet generally decreasing trend after reaching a peak. Beginning at 34.21%, ROE rises to a high of 53.51% in 2022 before declining to 34.28% by the most recent period. This pattern suggests that profitability relative to reported equity improved considerably before cooling off in the latter years.

Adjusted ROE, which accounts for goodwill, follows a somewhat similar trajectory but at higher levels. Starting significantly higher at 50.89%, it increases sharply to 76.82% by 2022, indicating strong profitability when goodwill adjustments are considered. Thereafter, adjusted ROE declines but remains robust at 41.88% in the final period, reflecting sustained albeit waning return performance relative to adjusted equity.

Overall, the data indicates strong growth in equity values with a pronounced rise around the years 2022 to 2023. Profitability ratios, while peaking mid-period, have entered a phase of moderate decline, suggesting a normalization after a period of exceptional performance. The adjusted figures portray higher profitability ratios, revealing the impact of goodwill on measured returns and equity base. This comprehensive view facilitates an understanding of both the tangible and intangible components influencing the company’s financial position and efficiency over time.

The analysis of the financial data over the six-year period reveals several key trends regarding the company's total assets and return on assets (ROA), both reported and goodwill-adjusted.

Total Assets

The reported total assets increased consistently year-over-year, rising from $22,353 million in 2020 to $36,299 million in 2025. This represents substantial growth in the asset base, suggesting ongoing investments or acquisitions expanding the company's operational scale.

The goodwill-adjusted total assets also followed a similar upward trajectory but at consistently lower levels than the reported figures due to the exclusion of goodwill. Adjusted assets grew from $18,887 million in 2020 to $32,592 million in 2025, maintaining a similar growth rate and reflecting the underlying tangible and intangible assets excluding goodwill.

Return on Assets (ROA)

Reported ROA showed a peak in 2022 at 24.41%, up from 16.19% in 2020, indicating strong efficiency in generating profits from the reported asset base. However, post-2022, there is a gradual decline to 19.28% by 2025, which could reflect increasing asset base outpacing net income growth or downward pressure on profitability.

Adjusted ROA, which accounts for the asset base excluding goodwill, was consistently higher than the reported ROA, peaking at 28.34% in 2022. This suggests that excluding goodwill provides a clearer picture of operational efficiency, which similarly declines to 21.47% by 2025. The trend mirrors the reported ROA pattern with a peak followed by a softening in returns.

Comparative Insights

The parallel movement of both reported and adjusted total assets indicates that goodwill constitutes a stable proportion of the asset base over time. The decline in ROA after 2022, despite increasing assets, may point to challenges in maintaining profit margins or returns relative to investments.

The stronger adjusted ROA highlights that excluding goodwill, the company's operational assets generate relatively better returns; however, the diminishing trend across both metrics suggests caution regarding future profitability or asset utilization efficiency.

Overall, the data suggest robust asset growth accompanied by strong but slightly weakening profitability ratios in the latter years. This highlights the importance of monitoring asset quality and return drivers to sustain financial performance going forward.