Applied Materials Inc. (NASDAQ:AMAT)

The analysis of the annual financial data reveals several discernible trends in the market performance and invested capital of the company over the six-year period examined.

Market (fair) value

The market value exhibits a general upward trajectory with notable fluctuations. Starting at US$85,810 million, it sharply increased to US$134,667 million in the following year, then experienced a decline to US$91,662 million two years later. Subsequently, the value rebounded strongly, reaching US$137,071 million and continuing to increase to US$140,097 million, culminating in a significant jump to US$207,045 million in the final observed year. This pattern suggests periods of volatility followed by substantial recovery and growth.

Invested capital

The invested capital shows a steady and consistent increase across the timeline. Beginning at US$13,090 million, it grows gradually year over year, peaking at US$20,121 million in the last period. This steady increase indicates ongoing investment and expansion in the company’s capital base.

Market Value Added (MVA)

The MVA closely mirrors the trends in market value, indicating the difference between the market (fair) value and the invested capital. It begins at US$72,720 million and rises sharply to US$119,950 million. Following this, there is a notable decrease to US$76,772 million, paralleling the dip in market value. The MVA then recovers to US$119,294 million and continues to increase steadily, reaching US$186,924 million by the final period. This trend reflects the company’s increasing ability to generate value over and above its invested capital, with some intermittent volatility.

Overall, the company demonstrates a positive long-term growth trajectory in market valuation and invested capital, with accompanying increases in market value added. Periods of volatility in market valuation were followed by significant recoveries, hinting at resilience and strong market confidence in the company’s prospects. The continuous increase in invested capital complements these trends, suggesting strategic reinvestment and capability expansion over the years.

The financial data indicates significant fluctuations and notable growth in key metrics over the analyzed periods.

Market Value Added (MVA)

The company's Market Value Added demonstrates considerable variability with initial growth from 72,720 million USD in 2020 to a peak of 119,950 million USD in 2021. This is followed by a decline to 76,772 million USD in 2022. Subsequently, the MVA recovers significantly, reaching 119,294 million USD in 2023 and continuing to grow through 2024 and 2025, culminating at 186,924 million USD. This upward trajectory in recent years suggests strengthening market perceptions of value creation beyond invested capital.

Invested Capital

Invested capital shows a steady and consistent increase throughout the periods, rising from 13,090 million USD in 2020 to 20,121 million USD in 2025. This growth in invested capital reflects ongoing investment activities, potentially aimed at expanding operational capacity or enhancing asset base to support future growth.

MVA Spread Ratio

The MVA spread ratio, which provides insight into the value generated relative to the invested capital, displays a pattern consistent with the MVA fluctuations. It rises sharply from 555.54% in 2020 to 815.05% in 2021, declines to 515.59% in 2022, and then increases again, reaching 929% by 2025. This indicates periods of varying efficiency in value generation, with the most recent years showing improved ability to create market value from invested capital.

Overall, the data reveals a company experiencing cycles of market value growth and contraction, but with a clear long-term improvement in value creation efficiency relative to its invested capital. The steady increase in invested capital supports this growth trajectory, suggesting strategic reinvestment aimed at sustaining or enhancing market value over time.

The analysis of the financial data reveals several key trends regarding the company’s market value added (MVA), net revenue, and MVA margin over the observed periods.

Market Value Added (MVA)

The MVA shows a fluctuating but generally increasing trend over the given years. Starting at 72,720 million US dollars in 2020, it increased notably to 119,950 million in 2021. This was followed by a decline to 76,772 million in 2022, indicating a contraction phase. However, the MVA rebounded significantly in 2023 to 119,294 million and further increased modestly in 2024 to 121,184 million. The most substantial growth occurred by 2025, with an MVA reaching 186,924 million, representing the highest value in the observed periods.

Net Revenue

Net revenue demonstrates steady growth throughout the analyzed timeframe. It rose from 17,202 million US dollars in 2020 to 23,063 million in 2021. Subsequent years show continual increment: 25,785 million in 2022, 26,517 million in 2023, 27,176 million in 2024, and reaching 28,368 million in 2025. This consistent upward movement suggests an expanding sales base or improvement in revenue-generating activities over the six-year span.

MVA Margin

The MVA margin, expressed as a percentage, indicates significant volatility. From a base of 422.74% in 2020, it increased substantially to 520.1% in 2021. It then sharply declined to 297.74% in 2022, which parallels the drop in MVA observed in the same year. The margin rebounded sharply in 2023 to 449.88% and stabilized slightly lower at 445.92% in 2024. The most notable increase occurs in 2025 when the margin surged to 658.93%, suggesting an improved efficiency or market perception leading to a higher creation of value relative to revenue.

Overall, the company exhibits strong net revenue growth with correlated, yet more volatile, changes in market value added and MVA margin. The year 2022 stands out as an anomaly with a decline in MVA and MVA margin despite continued revenue growth. Following that year, both MVA and its margin improved significantly, with 2025 showing remarkable value creation compared to previous periods. This may imply enhanced operational performance, market conditions, or investor confidence contributing to the substantial market value uplift relative to the company’s revenues.