Applied Materials Inc. (NASDAQ:AMAT)

Net Fixed Asset Turnover

The net fixed asset turnover ratio shows a notable upward trend starting from the initial available data point in January 2020, where it begins around 9.55 and continues to rise, peaking near 12.25 by January 2022. This suggests increased efficiency in utilizing fixed assets to generate revenue during this period. Following this peak, a gradual decline is observed, with the ratio decreasing steadily to approximately 6.94 by the last reported quarter in July 2025. This downward movement may indicate either a reduction in asset utilization efficiency or an accumulation of fixed assets not yet fully leveraged for revenue generation.

Total Asset Turnover

The total asset turnover ratio displays moderate fluctuations but generally maintains a range between 0.7 and 1.0 throughout the observed quarters. From early 2020, the ratio hovers around 0.77 and sees a slight increase, reaching about 0.98 around early 2022. Following this peak, the ratio experiences a mild decline and stabilizes near 0.8 to 0.84 towards the end of the dataset. This pattern suggests relatively stable but somewhat diminishing efficiency in generating sales from total assets over the evaluated timeframe.

Equity Turnover

The equity turnover ratio begins near 1.78 in early 2020 and trends downward until reaching a low of approximately 1.43 by late 2024. Interestingly, there is a period of growth between mid-2021 and early 2022 where the ratio increases to slightly above 2.1, indicating a temporary improvement in the use of shareholder equity to generate revenue. After this peak, a steady decline resumes, suggesting weakening equity efficiency in revenue generation towards the later quarters.

The financial data exhibits several notable trends and shifts over the analyzed periods, particularly relating to net revenue, property, plant and equipment, and net fixed asset turnover ratios.

Net Revenue

Net revenue shows a general upward trajectory from early 2019 through early 2025, increasing from approximately $3.75 billion to over $7.3 billion. This indicates a strong growth trend more than doubling revenue over the span of six years. However, fluctuations occur within shorter intervals; for example, there are minor dips in revenue in several quarters, such as around mid-2023 and parts of 2024, suggesting some periodic volatility or market pressures.

Property, Plant and Equipment, Net

The net value of property, plant, and equipment steadily increases throughout the period, from about $1.46 billion at the start to over $4.1 billion by early 2025. This consistent increase reflects substantial ongoing capital investment and expansion of fixed assets, which supports production capacity growth and possibly technological upgrades or modernization efforts.

Net Fixed Asset Turnover Ratio

The ratio exhibits a clear declining trend over time. Initially, around late 2019 to early 2022, the ratio remains relatively high and stable, generally above 10, peaking near 12, indicating efficient use of fixed assets to generate revenue. From approximately early 2022 onward, the ratio gradually decreases, reaching below 7 by early 2025. This downward movement suggests diminishing efficiency in using fixed assets to generate revenue, possibly due to the rapid accumulation of fixed assets outpacing revenue growth or changes in operational dynamics.

In synthesis, the data reveals a company experiencing significant revenue growth alongside consistent capital investment. However, the decreasing net fixed asset turnover ratio points to a potential area of concern regarding asset utilization efficiency. This might warrant further investigation to optimize asset management or to reassess capital expenditure strategies to ensure they translate effectively into revenue gains.

Net Revenue

The net revenue displays an overall upward trend across the observed quarters, increasing from approximately $3.75 billion in the first quarter of 2019 to about $7.3 billion in the third quarter of 2025. There are some fluctuations within this period, for instance, a slight dip observed around early 2023 and mid-2024. Despite these minor declines, the general trajectory remains positive, indicating continued growth in revenue generation over the long term.

Total Assets

The total assets show a steady increase over the reporting periods. Starting near $18.9 billion in early 2019, assets grow to more than $34.2 billion by the third quarter of 2025. The growth is relatively smooth, with only small variances around early 2025 where assets slightly decreased before resuming an upward trend. This suggests consistent investment or accumulation of resources over the analyzed timeframe.

Total Asset Turnover

The total asset turnover ratio presents a different trajectory with more variation over time. It began at 0.77 in mid-2019 and experienced a decrease to 0.71 by mid-2020, indicating diminishing efficiency in utilizing assets to generate revenue during that period. Subsequently, it improved gradually, reaching peaks near 0.98 and 0.96 in early and mid-2022. Following this peak, a gradual decline was noted over subsequent quarters, reaching 0.79 in early 2025. The ratio then showed a modest recovery toward 0.84 by the third quarter of 2025. These fluctuations suggest varying effectiveness in asset utilization, with periods of improved operational efficiency followed by some decline.

Summary of Trends

The company demonstrates solid growth in revenue and asset base simultaneously, reflecting expansion and accumulation of resources. However, the total asset turnover ratio indicates that operational efficiency in generating revenue from assets has not consistently improved. The ratio peaked in 2022 but then declined somewhat, pointing to potential challenges in sustaining operational efficiency amid growth. The overall pattern suggests that while growth is robust, attention to asset utilization efficiency may be warranted to support continued performance improvement.

Net Revenue

Net revenue displays an overall upward trend across the reported periods, rising from 3,753 million USD in early 2019 to above 7,000 million USD by 2025. The growth appears steady with occasional fluctuations. Notably, there was a strong increase from early 2020 through 2021, followed by some fluctuations in subsequent quarters but maintaining higher levels compared to the initial periods. The revenue peaked around 7,302 million in late 2024, with minor dips thereafter, indicating robust business performance and recovery post mid-2020 fluctuations.

Stockholders’ Equity

The stockholders’ equity similarly shows a consistent growth pattern, starting just above 8,000 million USD in early 2019 and reaching close to 19,500 million USD by mid-2025. There are no significant declines, suggesting steady accumulation of equity capital and retained earnings over time. The progression is mostly smooth, with a moderate acceleration particularly noticeable from 2022 onward, which could suggest reinvested earnings or capital raises contributing to equity growth.

Equity Turnover Ratio

The equity turnover ratio, which is available from mid-2019 onward, starts at 1.78 and generally declines over the subsequent periods. It peaks at 2.14 around mid-2022 but trends downward toward 1.43 by 2025. This gradual reduction in turnover implies that revenue generation relative to equity invested is slowing down over time. The decrease may indicate either increasing equity base outpacing revenue growth or a reduction in operational efficiency concerning equity utilization. The highest turnover occurs around 2022, coinciding with a strong revenue period, followed by decline consistent with equity growth outpacing revenue.

Combined Insights

The data suggests that while revenue and equity have both grown substantially, the efficiency in using equity to generate revenue has decreased over time. This implies that although the company is expanding in size and capital base, it may not be converting that growth into proportionally higher revenues. Management might consider strategies to improve operational leverage or optimize capital structure to enhance equity turnover.