Applied Materials Inc. (NASDAQ:AMAT)

Net Fixed Asset Turnover

The net fixed asset turnover ratio exhibited a generally declining trend over the observed periods. Initially, it increased slightly from 11.11 to a peak of 12.25 between early 2021 and the start of 2022. However, from the first quarter of 2022 onwards, the ratio consistently trended downward, reaching 6.15 by the fourth quarter of 2025. This decline suggests a reduction in efficiency in generating sales from fixed asset investments over time.

Total Asset Turnover

The total asset turnover ratio showed a gradual increase in the early quarters, rising from 0.78 in January 2021 to a peak of 0.98 by May 2022. Following this peak, the ratio experienced a mild downward trend, fluctuating between 0.84 and 0.94 through to the first quarter of 2025. The ratio eventually decreased to 0.78 by the fourth quarter of 2025, indicating a diminishing ability to generate sales from the total asset base towards the end of the period. Notably, the fluctuations in total asset turnover were less pronounced than those observed in net fixed asset turnover.

Equity Turnover

The equity turnover ratio demonstrated a similar pattern to the other turnover ratios. Starting at 1.59 in early 2021, the ratio increased steadily until it reached a peak of 2.14 in May 2022. From that point, a progressive decline is evident, with the ratio reducing to 1.39 by the last quarter of 2025. This trend indicates a decreasing efficiency in generating revenue from shareholders’ equity over the latter part of the timeframe analyzed.

Summary of Trends

Overall, all three turnover ratios peaked around mid-2022, indicating optimized asset and equity utilization during this period. Subsequently, all ratios exhibit a downward trend, reflecting a gradual decrease in operational efficiency relative to fixed assets, total assets, and equity. The decreases are more pronounced in net fixed asset turnover, suggesting specific challenges in leveraging fixed asset investments to generate sales. The total asset turnover showed smaller fluctuations, while equity turnover also slid steadily, consistent with a broader decline in operational effectiveness. This pattern could suggest either slower sales growth relative to asset and equity growth or increasing asset and equity bases without proportional sales increases in the latter part of the analyzed period.

Net Revenue

Net revenue exhibited a generally upward trajectory over the observed periods, increasing from 5,162 million US dollars at the beginning of 2021 to a peak near 7,302 million in the third quarter of 2025. However, fluctuations are noticeable with occasional declines, such as the decrease from 7,166 million in the first quarter of 2025 to 6,800 million in the last quarter of 2025. Despite these variations, the overall trend points to growth, indicating increasing sales or operational scale over the period.

Property, Plant, and Equipment, Net

The net value of property, plant, and equipment consistently increased throughout the periods, starting from 1,638 million US dollars in early 2021 and reaching 4,610 million by late 2025. The steady accumulation of fixed assets suggests ongoing capital investments to support business operations and capacity expansion. This progressive build-up of tangible assets reflects a strategy focused on long-term operational enhancement.

Net Fixed Asset Turnover

The net fixed asset turnover ratio demonstrated a clear declining trend, decreasing from 11.11 at the beginning of 2021 to 6.15 by the fourth quarter of 2025. This indicates that while assets were growing steadily, revenue generation per unit of fixed asset diminished over time. Such a trend could suggest diminishing efficiency or underutilization of the increasing asset base.

Overall Insights

The data shows simultaneous growth in both revenue and asset base, but with declining productivity of fixed assets in terms of revenue generation. This may imply that capital expenditures have outpaced corresponding revenue growth, possibly due to expansion into new segments, investments not yet yielding proportional output, or changing market conditions affecting asset utilization rates. Monitoring the balance between asset growth and revenue efficiency will be critical for maintaining profitability and operational effectiveness.

Net Revenue Trends

Net revenue demonstrated an overall upward trend from January 2021 through October 2025, increasing from 5,162 million US dollars to 6,800 million US dollars over the period. Revenue showed some fluctuations within quarters, with slight dips observed in April 2023 and April 2024, but the general trajectory remained positive, reaching a peak at 7,302 million US dollars in July 2025. This indicates growth in sales despite occasional short-term volatility.

Total Assets Analysis

Total assets increased steadily throughout the period, starting at 23,305 million US dollars in January 2021 and rising to 36,299 million US dollars by October 2025. The asset base expanded consistently, reflecting potential investments in operational capacity or other asset acquisitions. The rise in total assets aligns with overall business growth and supports the company's capacity to generate higher revenue.

Total Asset Turnover Observations

The total asset turnover ratio exhibited a declining trend over the examined period. Beginning at 0.78 in January 2021, the ratio initially improved, peaking at around 0.98 in May 2022, suggesting enhanced efficiency in using assets to generate revenue. However, from mid-2022 onwards, the ratio steadily declined to 0.78 by October 2025. This decrease implies that asset growth outpaced revenue growth in recent periods, indicating a reduction in operational efficiency relative to asset deployment.

Integrated Insights

The data portrays a company experiencing consistent growth in both revenue and assets, yet facing challenges in maintaining asset utilization efficiency. While the incremental rise in net revenue reflects successful sales performance, the declining asset turnover signals that asset investments may not be fully optimized for revenue generation. Strategic attention may be warranted to improve asset productivity and sustain profitability amidst expanding asset bases.

The financial data reveals the company's performance trends over a series of quarterly periods with respect to net revenue, stockholders’ equity, and equity turnover ratio.

Net Revenue

Net revenue exhibited a general upward trajectory from the first recorded quarter through to the middle of the analyzed timeframe, rising from approximately 5,162 million US dollars to a peak near 7,302 million US dollars. Following this peak, net revenue displayed some volatility, with declines noted in the last quarter where it decreased to around 6,800 million US dollars. Overall, the pattern suggests growth with periodic fluctuations, which could reflect market dynamics or operational adjustments.

Stockholders’ Equity

Stockholders’ equity consistently increased across the periods under review. Starting from roughly 11,473 million US dollars initially, equity values climbed steadily to surpass 20,000 million US dollars by the final quarter. This steady increase signifies an accumulation of retained earnings, capital injections, or a combination thereof, indicating strengthening financial stability and enhanced shareholder value over time.

Equity Turnover Ratio

The equity turnover ratio experienced an upward trend during the earlier quarters, rising from 1.59 up to a maximum of approximately 2.14, indicating more efficient use of equity to generate revenue during that timeframe. However, from this peak, there was a gradual decline to around 1.39 in the last quarter. This decrease suggests a reduction in the efficiency with which equity is being utilized to produce revenue, potentially due to slower revenue growth relative to equity expansion or operational challenges.

In summary, the company demonstrated significant growth in both net revenue and stockholders’ equity over the observed period. However, the declining trend in equity turnover ratio towards the end of the period may warrant further investigation as it implies a reduction in capital efficiency despite the growth in absolute financial metrics. Monitoring this ratio alongside revenue and equity development will be essential for assessing ongoing operational effectiveness.