Applied Materials Inc. (NASDAQ:AMAT)

The analysis of property, plant, and equipment over the six-year period reveals consistent growth across all categories, contributing to an overall expansion of the asset base.

Land and Improvements

There is a steady increase from $254 million in 2019 to $492 million in 2024, with the most significant increment occurring in the final year, reflecting ongoing investments in site assets.

Buildings and Improvements

This category demonstrates continuous growth, rising from $1.59 billion in 2019 to $2.36 billion in 2024. The annual increases suggest steady capital expenditure aligned with capacity expansion or modernization efforts.

Demonstration and Manufacturing Equipment

Values steadily increase from $1.51 billion in 2019 to $2.58 billion in 2024, indicating ongoing investment in operational and production-related assets to support manufacturing capabilities.

Furniture, Fixtures and Other Equipment

This line item shows moderate growth, increasing from $602 million in 2019 to $782 million in 2024, reflecting steady asset addition or replacement in supporting infrastructure.

Construction in Progress

There is a notable rise from $120 million in 2019 to $898 million in 2024, with especially sharp increases in the latter years. This trend highlights significant ongoing capital projects likely to be completed in future periods.

Gross Property, Plant and Equipment

The aggregate gross property, plant, and equipment increases consistently from $4.07 billion in 2019 to $7.11 billion in 2024, driven by growth across all underlying asset categories.

Accumulated Depreciation

The accumulated depreciation grows from a negative $2.54 billion in 2019 to negative $3.77 billion in 2024. The increasing magnitude reflects systematic depreciation expense matching the growing asset base and aging of fixed assets.

Property, Plant and Equipment, Net

Net property, plant, and equipment rises from $1.53 billion in 2019 to $3.34 billion in 2024. This growth at the net level indicates that asset additions outpace depreciation, supporting the expansion of productive capacity and asset renewal.

Overall, the company has demonstrated a clear trend of asset growth, with substantial investments in construction in progress suggesting future capacity expansion. The balance between gross assets and accumulated depreciation indicates healthy asset management and continued capital expenditure aimed at sustaining and growing operational capabilities.

Average Age Ratio

The average age ratio demonstrates a consistent downward trend from 66.6% in 2019 to 56.97% in 2024. This indicates a relative decrease in the age of the property, plant, and equipment assets over the period, suggesting either asset renewal or additions of newer assets within the asset base.

Estimated Total Useful Life

The estimated total useful life remained stable at 13 years from 2020 to 2023 after increasing from 12 years in 2019. A notable rise occurred in 2024, with an increase to 19 years. This significant extension likely reflects reassessment or upgrades in asset longevity or changes in accounting estimates.

Estimated Age, Time Elapsed Since Purchase

The estimated age fluctuated slightly, moving from 8 years in 2019 to a peak of 9 years in 2020 and 2021, followed by a decline to 8 years during 2022 and 2023. In 2024, it increased sharply to 11 years. This pattern suggests some asset acquisitions or retirements over time, with a mix of older assets culminating in a higher average age by 2024.

Estimated Remaining Life

The estimated remaining life was consistent at 4-5 years between 2019 and 2023, maintaining a 5-year expectation for most of the period following 2019. In 2024, a substantial increase to 8 years indicates a reassessment that significantly improved the projected remaining service period of the assets.

Accumulated depreciation

There is a consistent upward trend in accumulated depreciation, rising steadily from 2,542 million US dollars in 2019 to 3,770 million US dollars in 2024. This reflects the aging and usage of the company's fixed assets over time.

Gross property, plant and equipment (PP&E)

Gross PP&E shows a strong growth trajectory, increasing from 4,071 million US dollars in 2019 to 7,109 million US dollars in 2024. This significant increase indicates ongoing investments in fixed assets, expansion, or upgrades within the company’s operational infrastructure.

Land and improvements

The value of land and improvements has grown steadily from 254 million US dollars in 2019 to 492 million US dollars in 2024. This nearly doubling in value suggests acquisitions or enhancements of land and related assets, possibly supporting the company’s expansion or operational needs.

Average age ratio

The average age ratio, which typically measures the proportion of accumulated depreciation relative to gross PP&E, displays a decreasing trend from 66.6% in 2019 to 56.97% in 2024. This decline indicates that the asset base is becoming relatively newer over time, likely due to significant capital expenditures adding newer assets faster than older assets are depreciated. It may also suggest that the company is actively managing its asset portfolio by adding new assets or replacing older ones.

Gross property, plant and equipment

The gross property, plant and equipment value exhibited a consistent upward trend from 2019 to 2024. Beginning at $4,071 million in 2019, the value increased each year, reaching $7,109 million by 2024. This represents a significant growth, indicating ongoing investment and expansion in fixed assets over the period analyzed.

Land and improvements

The value of land and improvements also showed a general increase, rising from $254 million in 2019 to $492 million in 2024. Notably, there was steady growth with slight accelerations in certain years, particularly between 2023 and 2024, suggesting targeted acquisitions or enhancements in this category during later years.

Depreciation expense

The depreciation expense followed a rising trend from 2019 through 2023, increasing from $306 million to $471 million. However, in 2024, a noticeable decline to $346 million was observed. This shift may reflect changes in asset composition, utilization, or accounting policies, especially considering the concurrent change in estimated useful life.

Estimated total useful life

The estimated useful life of the assets remained stable at 12 to 13 years from 2019 through 2023 but increased markedly to 19 years in 2024. This extension suggests a reassessment of asset longevity, which could impact depreciation schedules and expense recognition, as reflected in the reduced depreciation expense for 2024.

Accumulated Depreciation

The accumulated depreciation consistently increased over the examined period, rising from $2,542 million in 2019 to $3,770 million in 2024. This trend indicates a continuous depreciation of property, plant, and equipment assets, reflecting their aging and usage over time.

Depreciation Expense

The depreciation expense displayed an overall upward trend from 2019 through 2023, growing from $306 million to $471 million. However, there was a notable decrease in 2024 to $346 million. This decrease suggests a change in the depreciation policy, asset composition, or reduced capital expenditure in earlier years affecting the expense recognition.

Time Elapsed Since Purchase

The average age of the assets remained relatively stable around 8 to 9 years from 2019 to 2023. In 2024, this figure increased to 11 years, indicating that the asset base is aging without corresponding replacement or significant new asset acquisitions in the latest period. This aging could impact maintenance costs and operational efficiency in the future.

Overall Analysis

The data reveals an aging asset base with steadily increasing accumulated depreciation, correlating with an initially rising depreciation expense followed by a decline in the latest year. The slowdown in depreciation expense alongside an increase in the time elapsed since purchase may suggest more mature assets with lower depreciation charges or an adjustment in asset management strategies.

Property, Plant, and Equipment, Net

The net value of property, plant, and equipment has shown a consistent upward trend over the observed period. Starting at $1,529 million in 2019, it increased steadily each year, reaching $3,339 million by 2024. This represents more than a doubling in net book value, reflecting ongoing investments in fixed assets or acquisitions exceeding accumulated depreciation. The growth appears robust and consistent, with the largest annual increase occurring between 2023 and 2024.

Land and Improvements

The value of land and improvements exhibited a similar positive trend, increasing from $254 million in 2019 to $492 million in 2024. The growth was steady, with moderate increases each year. Notably, there was a small plateau between 2021 and 2023, but a significant jump occurred from 2023 to 2024, indicating recent substantial expenditures or revaluations in land and improvements.

Depreciation Expense

Depreciation expense generally increased over the period, beginning at $306 million in 2019 and peaking at $471 million in 2023. However, in 2024, there was a notable decline in depreciation expense to $346 million. This departure from the prior upward trend may indicate changes in the depreciation policy, asset disposals, or the impact of longer asset lives on annual depreciation costs.

Estimated Remaining Life

The estimated remaining life of the property, plant, and equipment remained stable at 4 years for the first two periods, then increased to 5 years from 2021 through 2023. In 2024, it extended significantly to 8 years. This increase may reflect asset additions with longer useful lives or revisions in depreciation estimates, potentially contributing to the lower depreciation expense observed in the latest year.